Innospec (NASDAQ: IOSP) and Valvoline (NYSE:VVV) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitability and analyst recommendations.
Institutional and Insider Ownership
91.7% of Innospec shares are held by institutional investors. Comparatively, 92.3% of Valvoline shares are held by institutional investors. 2.0% of Innospec shares are held by insiders. Comparatively, 0.1% of Valvoline shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Innospec pays an annual dividend of $0.76 per share and has a dividend yield of 1.4%. Valvoline pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Innospec pays out 24.3% of its earnings in the form of a dividend. Valvoline pays out 15.5% 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.
Earnings and Valuation
This table compares Innospec and Valvoline’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Innospec||$1.06 billion||1.28||$150.30 million||$3.13||17.92|
|Valvoline||$2.03 billion||2.22||$520.00 million||$1.29||17.22|
Valvoline has higher revenue and earnings than Innospec. Valvoline is trading at a lower price-to-earnings ratio than Innospec, indicating that it is currently the more affordable of the two stocks.
This table compares Innospec and Valvoline’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current recommendations for Innospec and Valvoline, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Innospec currently has a consensus price target of $65.00, suggesting a potential upside of 15.86%. Valvoline has a consensus price target of $25.73, suggesting a potential upside of 15.78%. Given Innospec’s stronger consensus rating and higher probable upside, analysts plainly believe Innospec is more favorable than Valvoline.
Valvoline beats Innospec on 9 of the 15 factors compared between the two stocks.
Innospec Inc. is a specialty chemicals company engaged in developing, manufacturing, blending, marketing and supplying of specialty chemicals for use as fuel additives and ingredients for personal care, home care, agrochemical, mining and other applications and oilfield chemicals. The Company operates through four business segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives. Its Fuel Specialties develops, manufactures, blends, markets and supplies various specialty chemical products that are used as additives for a range of fuels. Its Performance Chemicals provides technology-based solutions. Its Oilfield Services business supplies drilling, completion and production chemicals. Its Octane Additives business manufactures a fuel additive for use in automotive gasoline and provides services in respect of environmental remediation. Its customers include oil and gas exploration and production companies, fuel users, and oil refiners among others.
Valvoline Inc. (Valvoline) is engaged in the production and distribution of automotive, commercial and industrial lubricants, and automotive chemicals. The Company operates through three segments: Core North America, Quick Lubes and International. The Core North America segment sells Valvoline, and other branded and private label products in the United States and Canada to both consumers performing their own automotive maintenance, referred to as Do-It-Yourself (DIY) consumers, as well as, to installer customers using Valvoline products to service vehicles owned by Do-It-For-Me (DIFM) consumers. Its Quick Lubes segment services the passenger car and light truck quick lube market through platforms, including its franchised Valvoline Instant Oil Change (VIOC) stores and Express Care. Its International segment sells Valvoline and other branded products through its affiliates, joint ventures, licensees and independent distributors. Its products include All Climate, DuraBlend and MaxLife.
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