Critical Review: NewMarket (NYSE:NEU) & Air Products and Chemicals (NYSE:APD)

NewMarket (NYSE:NEU) and Air Products and Chemicals (NYSE:APD) are both materials companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Institutional & Insider Ownership

61.1% of NewMarket shares are held by institutional investors. Comparatively, 81.7% of Air Products and Chemicals shares are held by institutional investors. 8.6% of NewMarket shares are held by company insiders. Comparatively, 1.9% of Air Products and Chemicals shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for NewMarket and Air Products and Chemicals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewMarket	0	0	1	0	3.00
Air Products and Chemicals	0	7	10	2	2.74

Air Products and Chemicals has a consensus price target of $333.88, suggesting a potential upside of 8.66%. Given Air Products and Chemicals’ higher probable upside, analysts clearly believe Air Products and Chemicals is more favorable than NewMarket.

Valuation & Earnings

This table compares NewMarket and Air Products and Chemicals”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewMarket	$2.73 billion	2.94	$418.75 million	$46.48	18.74
Air Products and Chemicals	$12.04 billion	5.68	-$394.50 million	($0.22)	-1,396.72

NewMarket has higher earnings, but lower revenue than Air Products and Chemicals. Air Products and Chemicals is trading at a lower price-to-earnings ratio than NewMarket, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

NewMarket has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500. Comparatively, Air Products and Chemicals has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500.

Profitability

This table compares NewMarket and Air Products and Chemicals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NewMarket	15.80%	24.62%	12.51%
Air Products and Chemicals	-0.38%	16.87%	7.18%

Dividends

NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.4%. Air Products and Chemicals pays an annual dividend of $7.24 per share and has a dividend yield of 2.4%. NewMarket pays out 25.8% of its earnings in the form of a dividend. Air Products and Chemicals pays out -3,290.9% 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 7 consecutive years and Air Products and Chemicals has increased its dividend for 43 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Air Products and Chemicals beats NewMarket on 10 of the 18 factors compared between the two stocks.

About NewMarket

NewMarket Corporation, through its subsidiaries, primarily engages in the manufacture and sale of petroleum additives. The company offers lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized; engine oil additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and engines in ocean-going vessels; driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids; and industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. It also provides fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers. In addition, the company engages in the marketing of antiknock compounds, as well as contracted manufacturing and services activities; and owns and manages a real property in Virginia. It operates in North America, Latin America, Asia Pacific, Europe, the Middle East, Africa, and India. NewMarket Corporation was founded in 1887 and is headquartered in Richmond, Virginia.

About Air Products and Chemicals

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.