NewMarket (NYSE: NEU) and Celanese (NYSE:CE) are both mid-cap basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, profitability, earnings, dividends, institutional ownership, analyst recommendations and risk.
Insider and Institutional Ownership
58.6% of NewMarket shares are owned by institutional investors. Comparatively, 96.0% of Celanese shares are owned by institutional investors. 16.8% of NewMarket shares are owned by insiders. Comparatively, 0.4% of Celanese shares are owned 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.
NewMarket pays an annual dividend of $7.00 per share and has a dividend yield of 1.8%. Celanese pays an annual dividend of $1.84 per share and has a dividend yield of 1.7%. NewMarket pays out 35.7% of its earnings in the form of a dividend. Celanese pays out 31.6% 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. NewMarket has increased its dividend for 8 consecutive years and Celanese has increased its dividend for 5 consecutive years. NewMarket is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings and target prices for NewMarket and Celanese, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Celanese has a consensus target price of $107.85, indicating a potential upside of 0.89%. Given Celanese’s higher probable upside, analysts clearly believe Celanese is more favorable than NewMarket.
This table compares NewMarket and Celanese’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk & Volatility
NewMarket has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Celanese has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.
Valuation & Earnings
This table compares NewMarket and Celanese’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|NewMarket||$2.05 billion||2.27||$243.44 million||$19.59||20.02|
|Celanese||$5.39 billion||2.69||$900.00 million||$5.82||18.37|
Celanese has higher revenue and earnings than NewMarket. Celanese is trading at a lower price-to-earnings ratio than NewMarket, indicating that it is currently the more affordable of the two stocks.
Celanese beats NewMarket on 10 of the 17 factors compared between the two stocks.
NewMarket Company Profile
NewMarket Corporation is a holding company. The Company is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company operates through petroleum additives segment, which is primarily represented by Afton. The Company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end user applications. The petroleum additives product applications include lubricant additives and fuel additives. The Company’s All other category includes the operations of the TEL business, as well as contract manufacturing and services performed by Ethyl. The Ethyl plant facility is located in Houston, Texas. It is involved in terminal operations related to TEL and other fuel additives.
Celanese Company Profile
Celanese Corporation (Celanese) is a technology and specialty materials company. The Company’s segments include Advanced Engineered Materials, Consumer Specialties, Industrial Specialties, Acetyl Intermediates and Other Activities. The Advanced Engineered Materials segment includes the Company’s engineered materials business and certain affiliates. The Consumer Specialties segment includes the Company’s cellulose derivatives and food ingredients businesses, which serve consumer-driven applications. The Industrial Specialties segment includes the Company’s emulsion polymers and ethylene vinyl acetate (EVA) polymers businesses. The Acetyl Intermediates segment includes the Company’s intermediate chemistry business, which produces and supplies acetyl products, including acetic acid, vinyl acetate monomer (VAM), acetic anhydride and acetate esters. The Company has operations in North America, Europe and Asia. As of December 31, 2016, the Company had 30 global production facilities.
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