Financial Comparison: A. Schulman (SHLM) and Ingevity (NGVT)

A. Schulman (NASDAQ: SHLM) and Ingevity (NYSE:NGVT) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, valuation, institutional ownership, profitability, earnings and dividends.

Institutional & Insider Ownership

78.9% of A. Schulman shares are held by institutional investors. Comparatively, 91.4% of Ingevity shares are held by institutional investors. 4.1% of A. Schulman shares are held by company insiders. Comparatively, 0.1% of Ingevity shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

A. Schulman pays an annual dividend of $0.82 per share and has a dividend yield of 2.2%. Ingevity does not pay a dividend. A. Schulman pays out 94.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for A. Schulman and Ingevity, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
A. Schulman 0 1 1 0 2.50
Ingevity 0 0 5 0 3.00

A. Schulman currently has a consensus target price of $37.00, indicating a potential upside of 0.54%. Ingevity has a consensus target price of $79.20, indicating a potential upside of 11.63%. Given Ingevity’s stronger consensus rating and higher probable upside, analysts plainly believe Ingevity is more favorable than A. Schulman.

Valuation and Earnings

This table compares A. Schulman and Ingevity’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
A. Schulman $2.46 billion 0.44 $33.02 million $0.87 42.30
Ingevity $908.30 million 3.29 $35.20 million $2.24 31.67

Ingevity has lower revenue, but higher earnings than A. Schulman. Ingevity is trading at a lower price-to-earnings ratio than A. Schulman, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares A. Schulman and Ingevity’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
A. Schulman 1.35% 31.20% 3.06%
Ingevity 9.86% 58.14% 12.09%

Summary

Ingevity beats A. Schulman on 11 of the 15 factors compared between the two stocks.

A. Schulman Company Profile

A. Schulman, Inc. is an international supplier of plastic formulations, resins and services, and provides solutions to its customers’ requirements through custom-formulated products. The Company’s customers span a range of markets, such as packaging, mobility, building and construction, electronics and electrical, agriculture, personal care and hygiene, custom services, and sports, home and leisure. The Company’s segments include Europe, Middle East and Africa (EMEA), the United States and Canada (USCAN), Latin America (LATAM), Asia Pacific (APAC) and Engineered Composites (EC). As of August 31, 2016, the Company operated in six product families, including custom performance colors (CPC), engineered composites, Masterbatch solutions, engineered plastics, specialty powders and distribution services. The CPC product family offers powdered, pelletized and liquid color concentrates that are custom-designed for thermoplastic resins.

Ingevity Company Profile

Ingevity Corporation is a manufacturer of specialty chemicals and high performance carbon materials. The Company is also a manufacturer of activated carbon used in gasoline vapor emission control systems in cars, trucks, motorcycles and boats. The Company operates through two segments: Performance Materials and Performance Chemicals. The Performance Materials segment primarily produces automotive carbon products used in gasoline vapor emission control systems in cars, trucks, motorcycles and boats. The Performance Chemicals segment develops, manufactures and sells a range of specialty chemicals primarily derived from co-products of the Kraft pulping process. Its products are used in a range of applications, including asphalt paving, oil exploration and production, agrochemicals, adhesives, lubricants, publication inks and automotive components that reduce gasoline vapor emissions.

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