Critical Survey: Sociedad Quimica y Minera (SQM) versus Potash Co. of Saskatchewan (POT)

Sociedad Quimica y Minera (NYSE: SQM) and Potash Co. of Saskatchewan (NYSE:POT) are both large-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Earnings & Valuation

This table compares Sociedad Quimica y Minera and Potash Co. of Saskatchewan’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sociedad Quimica y Minera $1.94 billion 7.08 $278.29 million $1.51 34.54
Potash Co. of Saskatchewan $4.46 billion 3.57 $323.00 million $0.55 34.47

Potash Co. of Saskatchewan has higher revenue and earnings than Sociedad Quimica y Minera. Potash Co. of Saskatchewan is trading at a lower price-to-earnings ratio than Sociedad Quimica y Minera, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

12.7% of Sociedad Quimica y Minera shares are owned by institutional investors. Comparatively, 59.8% of Potash Co. of Saskatchewan shares are owned by institutional investors. 3.1% of Potash Co. of Saskatchewan shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Sociedad Quimica y Minera and Potash Co. of Saskatchewan, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sociedad Quimica y Minera 0 4 1 0 2.20
Potash Co. of Saskatchewan 1 4 7 0 2.50

Sociedad Quimica y Minera currently has a consensus price target of $49.00, suggesting a potential downside of 6.06%. Potash Co. of Saskatchewan has a consensus price target of $19.60, suggesting a potential upside of 3.38%. Given Potash Co. of Saskatchewan’s stronger consensus rating and higher probable upside, analysts clearly believe Potash Co. of Saskatchewan is more favorable than Sociedad Quimica y Minera.

Risk & Volatility

Sociedad Quimica y Minera has a beta of 1.01, meaning that its stock price is 1% more volatile than the S&P 500. Comparatively, Potash Co. of Saskatchewan has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500.

Dividends

Sociedad Quimica y Minera pays an annual dividend of $1.48 per share and has a dividend yield of 2.8%. Potash Co. of Saskatchewan pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Sociedad Quimica y Minera pays out 98.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Potash Co. of Saskatchewan pays out 72.7% of its earnings in the form of a dividend. Potash Co. of Saskatchewan has raised its dividend for 3 consecutive years.

Profitability

This table compares Sociedad Quimica y Minera and Potash Co. of Saskatchewan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sociedad Quimica y Minera 18.52% 17.58% 9.51%
Potash Co. of Saskatchewan 10.21% 5.01% 2.43%

Summary

Potash Co. of Saskatchewan beats Sociedad Quimica y Minera on 10 of the 17 factors compared between the two stocks.

About Sociedad Quimica y Minera

Sociedad Quimica y Minera de Chile S.A. (SQM), is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services. Specialty plant nutrients are fertilizers that enable farmers to improve yields and the quality of certain crops. Industrial chemicals have a range of applications in chemical processes, such as the manufacturing of glass and industrial nitrates. Iodine and its derivatives are used in the X-ray contrast media and biocides industries, among others. Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.

About Potash Co. of Saskatchewan

Potash Corporation of Saskatchewan Inc. (PCS) is a fertilizer producer producing a range of primary crop nutrients, such as potash, nitrogen and phosphate. The Company operates through three segments: potash, nitrogen and phosphate. As of December 31, 2016, it owned and operated five potash operations in Saskatchewan and owned one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. Its phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, phosphate feed and industrial acid, which is used in food products and industrial processes. It has phosphate mines and mineral processing plant complexes in Florida and North Carolina. As of December 31, 2016, the Company had four phosphate feed plants in the United States.

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