Critical Comparison: Methanex (MEOH) versus A. Schulman (SHLM)

Methanex (NASDAQ: MEOH) and A. Schulman (NASDAQ:SHLM) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Methanex and A. Schulman, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Methanex 1 7 5 0 2.31
A. Schulman 0 1 1 0 2.50

Methanex presently has a consensus target price of $57.92, indicating a potential downside of 7.17%. A. Schulman has a consensus target price of $37.00, indicating a potential downside of 4.88%. Given A. Schulman’s stronger consensus rating and higher possible upside, analysts plainly believe A. Schulman is more favorable than Methanex.

Risk and Volatility

Methanex has a beta of 1.81, suggesting that its stock price is 81% more volatile than the S&P 500. Comparatively, A. Schulman has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Methanex 9.81% 16.02% 6.31%
A. Schulman 1.35% 31.20% 3.06%

Dividends

Methanex pays an annual dividend of $1.20 per share and has a dividend yield of 1.9%. A. Schulman pays an annual dividend of $0.82 per share and has a dividend yield of 2.1%. Methanex pays out 39.1% of its earnings in the form of a dividend. A. Schulman pays out 95.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Methanex and A. Schulman’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Methanex $2.00 billion 2.62 -$12.54 million $3.07 20.33
A. Schulman $2.46 billion 0.47 $33.02 million $0.86 45.23

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

Insider & Institutional Ownership

83.1% of Methanex shares are owned by institutional investors. Comparatively, 78.9% of A. Schulman shares are owned by institutional investors. 1.0% of Methanex shares are owned by insiders. Comparatively, 3.3% of A. Schulman shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

About Methanex

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.

About A. Schulman

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.

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