Critical Review: NL Industries (NYSE:NL) vs. RPM International (NYSE:RPM)

NL Industries (NYSE:NL) and RPM International (NYSE:RPM) are both basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.

Risk & Volatility

NL Industries has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500. Comparatively, RPM International has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500.

Dividends

NL Industries pays an annual dividend of $0.36 per share and has a dividend yield of 6.1%. RPM International pays an annual dividend of $2.16 per share and has a dividend yield of 2.0%. NL Industries pays out 180.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RPM International pays out 40.4% of its earnings in the form of a dividend. NL Industries has raised its dividend for 2 consecutive years and RPM International has raised its dividend for 51 consecutive years.

Valuation and Earnings

This table compares NL Industries and RPM International”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NL Industries	$152.72 million	1.87	$67.23 million	$0.20	29.30
RPM International	$7.52 billion	1.83	$688.69 million	$5.35	20.09

RPM International has higher revenue and earnings than NL Industries. RPM International is trading at a lower price-to-earnings ratio than NL Industries, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for NL Industries and RPM International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NL Industries	0	1	0	0	2.00
RPM International	0	6	6	1	2.62

RPM International has a consensus target price of $130.70, indicating a potential upside of 21.59%. Given RPM International’s stronger consensus rating and higher probable upside, analysts plainly believe RPM International is more favorable than NL Industries.

Insider & Institutional Ownership

10.7% of NL Industries shares are owned by institutional investors. Comparatively, 80.9% of RPM International shares are owned by institutional investors. 0.3% of NL Industries shares are owned by company insiders. Comparatively, 1.6% of RPM International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares NL Industries and RPM International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NL Industries	35.06%	12.93%	9.69%
RPM International	9.16%	24.22%	9.46%

Summary

RPM International beats NL Industries on 14 of the 18 factors compared between the two stocks.

About NL Industries

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in Europe, North America, the Asia Pacific, and internationally. The company manufactures and sells mechanical and electronic cabinet locks and other locking mechanisms, including disc tumbler locks; pin tumbler locking mechanisms under KeSet, System 64, TuBar, and Turbine brands; and electronic locks under CompX eLock and StealthLock brands for use in various applications, such as mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. It also offers original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, and other exhaust components; gauges, such as GPS speedometers and tachometers; mechanical and electronic controls and throttles; wake enhancement devices, trim tabs, steering wheels, and other billet aluminum accessories; dash panels, LED indicators, wire harnesses, and other accessories; and grab handles, pin cleats, and other accessories; primarily for performance and ski/wakeboard and performance boats. In addition, the company produces and markets value-added titanium dioxide pigments, a base industrial product used in imparting whiteness, brightness, opacity, and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals, and other industrial and consumer products. The company sells its component products directly to original equipment manufacturers, as well as through distributors. NL Industries, Inc. was founded in 1891 and is based in Dallas, Texas. NL Industries, Inc. operates as a subsidiary of Valhi, Inc.

About RPM International

RPM International Inc. manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. It offers waterproofing, coating, and traditional roofing systems; sealants, air barriers, tapes, and foams; residential home weatherization systems; roofing and building maintenance services; sealing and bonding, subfloor preparation, flooring, and glazing solutions; resin flooring systems, polyurethane, MMA waterproof, epoxy floor paint and coatings, concrete repair, and protection products; fire stopping and intumescent steel coating, and manufacturing industry solutions; rolled asphalt roofing materials and chemical admixtures; concrete and masonry admixtures, concrete fibers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, injection resins, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and restoration materials; insulated building cladding materials; and concrete form wall systems. It also provides polymer flooring systems; fiberglass reinforced plastic gratings and shapes; corrosion-control coating, containment and railcar lining, fire and sound proofing, and heat and cryogenic insulation products; specialty construction products; amine curing agents, reactive diluents, and epoxy resins; fluorescent colorants and pigments; shellac-based-specialty and marine coatings; fire and water damage restoration, carpet cleaning, and disinfecting products; fuel additives; wood treatments, coatings, and touch-up products; and nail enamels, polishes, and coating components. In addition, it offers solutions for the paint contractors and DIYers, concrete restoration and flooring, metallic and faux finish coatings, cleaners, and hobby paints and cements; and caulks, adhesives, insulating foams, and patches, as well as spackling, glazing, and repair products. The company was incorporated in 1947 and is headquartered in Medina, Ohio.