Head-To-Head Contrast: Tronox (NYSE:TROX) versus Shin-Etsu Chemical (OTCMKTS:SHECY)

Shin-Etsu Chemical (OTCMKTS:SHECY) and Tronox (NYSE:TROX) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, earnings, institutional ownership, profitability and dividends.

Dividends

Shin-Etsu Chemical pays an annual dividend of $0.25 per share and has a dividend yield of 1.5%. Tronox pays an annual dividend of $0.20 per share and has a dividend yield of 4.9%. Shin-Etsu Chemical pays out 28.4% of its earnings in the form of a dividend. Tronox pays out -12.7% 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. Tronox is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Shin-Etsu Chemical has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Tronox has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500.

Valuation & Earnings

This table compares Shin-Etsu Chemical and Tronox”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shin-Etsu Chemical	$16.82 billion	4.05	$3.56 billion	$0.88	19.48
Tronox	$3.07 billion	0.21	-$48.00 million	($1.58)	-2.58

Shin-Etsu Chemical has higher revenue and earnings than Tronox. Tronox is trading at a lower price-to-earnings ratio than Shin-Etsu Chemical, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

0.0% of Shin-Etsu Chemical shares are held by institutional investors. Comparatively, 73.4% of Tronox shares are held by institutional investors. 1.7% of Tronox shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Shin-Etsu Chemical and Tronox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shin-Etsu Chemical	19.94%	10.90%	9.31%
Tronox	-8.48%	-4.83%	-1.40%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Shin-Etsu Chemical and Tronox, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shin-Etsu Chemical	1	0	0	0	1.00
Tronox	3	3	4	0	2.10

Tronox has a consensus target price of $5.07, suggesting a potential upside of 24.34%. Given Tronox’s stronger consensus rating and higher probable upside, analysts clearly believe Tronox is more favorable than Shin-Etsu Chemical.

Summary

Shin-Etsu Chemical beats Tronox on 9 of the 16 factors compared between the two stocks.

About Shin-Etsu Chemical

Shin-Etsu Chemical Co., Ltd. provides infrastructure, electronics, and functional materials in Japan. It is also involved in processing and specialized related services. The company operates through Infrastructure Materials; Electronics Materials; Functional Materials; and Processing and Specialized Services segments. In addition, it offers cellulose derivatives, synthetic pheromones, aroma chemicals, dielectric and LED/ semiconductor materials, silanes, photoresists, chlorides, caustic soda, liquid fluoroelastomers, polyvinyl chloride and vinyl acetate resin, silicones, and silicones processed goods. Further, the company offers pellicles, photomask blanks, synthetic quartz/ quartz cloth, pyrolytic boron nitride, LIB anode material, and silicon metal. Additionally, it provides rare earth magnets, compound semiconductors, and oxide single crystals. The company was formerly known as Shin-Etsu Nitrogen Fertilizer Co., Ltd. and changed its name to Shin-Etsu Chemical Co., Ltd. in 1940. Shin-Etsu Chemical Co., Ltd. was incorporated in 1926 and is headquartered in Tokyo, Japan.

About Tronox

Tronox Holdings plc operates as a vertically integrated manufacturer of TiO2 pigment in North America, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates titanium-bearing mineral sand mines; and engages in beneficiation and smelting operations. It offers TiO2 pigment; ultrafine specialty TiO2; zircon; feedstock; pig iron; monazite; titanium tetrachloride; and other products. The company’s products are used for the manufacture of paints, coatings, plastics, and paper, as well as various other applications. Tronox Holdings plc is based in Stamford, Connecticut.