Airgas (NYSE: ARG) and Methanex (NASDAQ:MEOH) are both mid-cap basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.
Institutional & Insider Ownership
83.1% of Methanex shares are owned by institutional investors. 1.0% of Methanex shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This is a summary of recent ratings for Airgas and Methanex, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Methanex has a consensus target price of $57.38, suggesting a potential downside of 3.56%. Given Methanex’s higher probable upside, analysts plainly believe Methanex is more favorable than Airgas.
Airgas pays an annual dividend of $2.40 per share and has a dividend yield of 1.7%. Methanex pays an annual dividend of $1.20 per share and has a dividend yield of 2.0%. Airgas pays out 53.0% of its earnings in the form of a dividend. Methanex pays out 39.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Methanex has increased its dividend for 14 consecutive years. Methanex is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Airgas and Methanex’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Methanex||$2.00 billion||2.50||-$12.54 million||$3.07||19.38|
Airgas has higher earnings, but lower revenue than Methanex. Methanex is trading at a lower price-to-earnings ratio than Airgas, indicating that it is currently the more affordable of the two stocks.
This table compares Airgas and Methanex’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Methanex beats Airgas on 11 of the 13 factors compared between the two stocks.
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.
Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company’s subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.
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