Critical Review: Orion Engineered Carbons (OEC) vs. AdvanSix (ASIX)

Orion Engineered Carbons (NYSE: OEC) and AdvanSix (NYSE:ASIX) are both small-cap basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Profitability

This table compares Orion Engineered Carbons and AdvanSix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orion Engineered Carbons 5.50% 137.36% 8.91%
AdvanSix 3.64% 20.30% 5.64%

Dividends

Orion Engineered Carbons pays an annual dividend of $0.81 per share and has a dividend yield of 3.3%. AdvanSix does not pay a dividend. Orion Engineered Carbons pays out 69.2% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent ratings for Orion Engineered Carbons and AdvanSix, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orion Engineered Carbons 0 1 4 0 2.80
AdvanSix 0 0 1 0 3.00

Orion Engineered Carbons presently has a consensus target price of $25.40, suggesting a potential upside of 3.89%. AdvanSix has a consensus target price of $46.00, suggesting a potential upside of 7.78%. Given AdvanSix’s stronger consensus rating and higher probable upside, analysts clearly believe AdvanSix is more favorable than Orion Engineered Carbons.

Risk & Volatility

Orion Engineered Carbons has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, AdvanSix has a beta of 2.84, suggesting that its share price is 184% more volatile than the S&P 500.

Institutional & Insider Ownership

54.6% of Orion Engineered Carbons shares are held by institutional investors. Comparatively, 71.3% of AdvanSix shares are held by institutional investors. 2.7% of AdvanSix shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Orion Engineered Carbons and AdvanSix’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Orion Engineered Carbons $1.14 billion 1.27 $49.38 million $1.17 20.90
AdvanSix $1.19 billion 1.09 $34.14 million $1.58 27.01

Orion Engineered Carbons has higher earnings, but lower revenue than AdvanSix. Orion Engineered Carbons is trading at a lower price-to-earnings ratio than AdvanSix, indicating that it is currently the more affordable of the two stocks.

Summary

AdvanSix beats Orion Engineered Carbons on 9 of the 16 factors compared between the two stocks.

About Orion Engineered Carbons

Orion Engineered Carbons S.A. is a producer of carbon black. The Company operates through two segments: Specialty Carbon Black and Rubber Carbon Black. The Specialty Carbon Black segment is engaged in the production of specialty carbon black. The Rubber Carbon Black segment is involved in the production of rubber carbon black. As of December 31, 2016, it operated a diversified carbon black business with over 280 specialty carbon black grades and approximately 80 rubber carbon black grades. Carbon black is used as a pigment and as a performance additive in coatings, polymers, printing and special applications (specialty carbon black), and in the reinforcement of rubber in tires and mechanical rubber goods (rubber carbon black). As of December 31, 2016, it operated a global platform of 13 production facilities in Europe, North and South America, Asia and South Africa and three sales companies, as well as one jointly-owned production plant in Germany.

About AdvanSix

AdvanSix Inc. is an integrated manufacturer of Nylon 6. The Company also sells a variety of other products, all of which are produced as part of the Nylon 6 resin manufacturing process primarily, including caprolactam, ammonium sulfate fertilizers and other chemical intermediates. The Company operates primarily through its integrated manufacturing sites located in Frankford, Pennsylvania, Hopewell, Virginia, and Chesterfield, Virginia. The Company offers ammonium sulfate, which is used by customers as a nitrogen-based fertilizer. It produces ammonium sulfate fertilizer as part of its manufacturing process. The Company manufactures ammonium sulfate fertilizers including Sulf-N and Sulf-N 26. The Company provides AdvanSix Aegis nylon resins and Aegis barrier nylon resins. Its nylon resins are a preferred choice in food, liquid, and consumer packaging along with mono/multifilament products, carpet fibers, automotive compounding and more. It offers Capran biaxially oriented nylon films.

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