Airgas (ARG) versus Innophos (IPHS) Financial Analysis

Airgas (NYSE: ARG) and Innophos (NASDAQ:IPHS) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Insider and Institutional Ownership

94.5% of Innophos shares are held by institutional investors. 2.3% of Innophos shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Airgas and Innophos, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Airgas 0 0 0 0 N/A
Innophos 0 1 1 0 2.50

Earnings and Valuation

This table compares Airgas and Innophos’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Airgas N/A N/A N/A $4.53 31.56
Innophos $725.34 million 1.26 $47.97 million $2.17 21.65

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

Dividends

Airgas pays an annual dividend of $2.40 per share and has a dividend yield of 1.7%. Innophos pays an annual dividend of $1.92 per share and has a dividend yield of 4.1%. Airgas pays out 53.0% of its earnings in the form of a dividend. Innophos pays out 88.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Airgas has increased its dividend for 14 consecutive years.

Profitability

This table compares Airgas and Innophos’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Airgas 5.98% 15.44% 5.04%
Innophos 6.19% 13.90% 7.26%

Summary

Innophos beats Airgas on 7 of the 11 factors compared between the two stocks.

About Airgas

Airgas, Inc. is a supplier of industrial, medical and specialty gases, and hard goods, such as welding equipment and related products. The Company is also a producer of atmospheric gases, carbon dioxide, dry ice and nitrous oxide and a supplier of safety products, refrigerants, ammonia products and process chemicals. It operates through two segments: Distribution and All Other Operations. The Distribution segment offers a portfolio of related gas and hard goods products and services to the end customers. The All Other Operations segment consists of five business units which manufacture or distribute carbon dioxide, dry ice, nitrous oxide, ammonia and refrigerant gases. It also offers supply chain management services and solutions, and product and process technical support across many customer segments. It markets its products and services through multiple sales channels, including branch-based sales representatives, retail stores and strategic customer account programs, among others.

About Innophos

Innophos Holdings, Inc. is a producer of nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care and industrial end markets. The Company also provides bioactive mineral and nutritional ingredients. The Company’s segments include Specialty Phosphates US & Canada, Specialty Phosphates Mexico, and Granular Triple Super Phosphate (GTSP) & Other. The Company has four principal product lines: Specialty Ingredients; Food and Technical Grade Purified Phosphoric Acid (PPA); Technical Grade Sodium Tripolyphosphate (STPP), & Detergent Grade PPA, and GTSP & Other. The Company’s bioactive mineral ingredients are mineral-based ingredients for food, beverage and dietary supplement end markets that are manufactured to be readily digestible. The Company has its manufacturing facilities located throughout the United States, Canada, Mexico and China.

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