Critical Survey: Stepan (SCL) versus OMNOVA Solutions (OMN)

Stepan (NYSE: SCL) and OMNOVA Solutions (NYSE:OMN) are both small-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, institutional ownership and analyst recommendations.

Valuation & Earnings

This table compares Stepan and OMNOVA Solutions’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stepan $1.77 billion 1.01 $86.19 million $3.93 20.09
OMNOVA Solutions $759.90 million 0.59 -$400,000.00 ($0.13) -76.92

Stepan has higher revenue and earnings than OMNOVA Solutions. OMNOVA Solutions is trading at a lower price-to-earnings ratio than Stepan, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

63.2% of Stepan shares are owned by institutional investors. Comparatively, 88.9% of OMNOVA Solutions shares are owned by institutional investors. 13.1% of Stepan shares are owned by insiders. Comparatively, 4.8% of OMNOVA Solutions shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Stepan has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500. Comparatively, OMNOVA Solutions has a beta of 2.18, meaning that its stock price is 118% more volatile than the S&P 500.

Dividends

Stepan pays an annual dividend of $0.90 per share and has a dividend yield of 1.1%. OMNOVA Solutions does not pay a dividend. Stepan pays out 22.9% of its earnings in the form of a dividend. OMNOVA Solutions has raised its dividend for 49 consecutive years.

Profitability

This table compares Stepan and OMNOVA Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stepan 4.81% 13.98% 6.91%
OMNOVA Solutions -0.78% 22.71% 3.84%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Stepan and OMNOVA Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stepan 0 3 2 1 2.67
OMNOVA Solutions 0 1 2 0 2.67

Stepan currently has a consensus price target of $35.60, suggesting a potential downside of 54.90%. OMNOVA Solutions has a consensus price target of $12.00, suggesting a potential upside of 20.00%. Given OMNOVA Solutions’ higher possible upside, analysts clearly believe OMNOVA Solutions is more favorable than Stepan.

Summary

Stepan beats OMNOVA Solutions on 10 of the 16 factors compared between the two stocks.

Stepan Company Profile

Stepan Company produces specialty and intermediate chemicals, which are sold to other manufacturers and used in a range of end products. The Company operates through three segments: Surfactants, Polymers and Specialty Products. The Company’s principal markets include manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products and plastics. Its Surfactants segment offers products, which are principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Its Polymers segment includes polyurethane polyols, polyester resins and phthalic anhydride. Its Specialty Products segment includes flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications.

OMNOVA Solutions Company Profile

OMNOVA Solutions Inc. is a provider of emulsion polymers, specialty chemicals and engineered surfaces for commercial, industrial and residential end uses. The Company’s segments include Performance Chemicals and Engineered Surfaces. The Performance Chemicals segment produces a range of emulsion polymers and specialty chemicals based on styrene butadiene, styrene butadiene acrylonitrile, styrene butadiene vinyl pyridine, nitrile butadiene, polyvinyl acetate, acrylic, styrene acrylic, vinyl acrylic, glyoxal, fluorochemical and bio-based chemistries. The Engineered Surfaces segment develops, designs, produces and markets a line of functional and decorative surfacing products, including coated fabrics, vinyl, paper, and specialty laminates and industrial films. The Performance Chemicals segment includes two product lines: Performance Materials and Specialty Chemicals, and the Engineered Surfaces segment includes two product lines: Coated Fabrics, and Laminates and Performance Films.

What are top analysts saying about Stepan Company? - Enter your email address in the form below to receive our free daily email newsletter that contains the latest headlines and analysts' recommendations for for Stepan Company and related companies.

Comments

Leave a Reply


share news on Facebook
tweet this investment news
share on linkedin
share on StockTwits
share on Google Plus
share on reddit