Financial Analysis: Arkema (OTCMKTS:ARKAY) and Huntsman (NYSE:HUN)

Huntsman (NYSE:HUN) and Arkema (OTCMKTS:ARKAY) are both materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Dividends

Huntsman pays an annual dividend of $0.35 per share and has a dividend yield of 3.5%. Arkema pays an annual dividend of $3.12 per share and has a dividend yield of 4.8%. Huntsman pays out -33.7% of its earnings in the form of a dividend. Arkema pays out 1,075.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Huntsman has raised its dividend for 4 consecutive years.

Valuation & Earnings

This table compares Huntsman and Arkema”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Huntsman	$5.68 billion	0.31	-$284.00 million	($1.04)	-9.54
Arkema	$10.26 billion	0.48	$71.28 million	$0.29	223.11

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

Volatility and Risk

Huntsman has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Arkema has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Huntsman and Arkema, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Huntsman	4	9	2	1	2.00
Arkema	1	6	0	0	1.86

Huntsman presently has a consensus target price of $11.69, suggesting a potential upside of 17.90%. Given Huntsman’s stronger consensus rating and higher possible upside, equities analysts clearly believe Huntsman is more favorable than Arkema.

Profitability

This table compares Huntsman and Arkema’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Huntsman	-2.81%	-3.11%	-1.28%
Arkema	0.67%	4.30%	2.15%

Insider & Institutional Ownership

84.8% of Huntsman shares are held by institutional investors. 6.8% of Huntsman shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Arkema beats Huntsman on 9 of the 17 factors compared between the two stocks.

About Huntsman

Huntsman Corporation manufactures and sells diversified organic chemical products worldwide. The company operates in three segments: Polyurethanes, Performance Products, and Advanced Materials. The Polyurethanes segment offers polyurethane chemicals, including methyl diphenyl diisocyanate, polyether and polyester polyols, and thermoplastic polyurethane; and aniline, benzene, nitrobenzene and other co-products. The Performance Products segment manufactures amines, such as polyetheramines, ethyleneamines, DGA Agent, JEFFCAT catalysts, and E-GRADE specialty amines and carbonates; and maleic anhydrides. The Advanced Materials segment offers epoxy, phenoxy, acrylic, polyurethane, and acrylonitrile-butadiene-based polymer formulations; and thermoset resins, curing and toughening agents, and carbon nanomaterials. The company provides pre-and post-sales technical service support to customers. Its products are used in a range of applications, including adhesives, aerospace, automotive, construction products, durable and non-durable consumer products, electronics, insulation, packaging, coatings and construction, power generation, and refining, as well as serves the elastomers, insulation, footwear, furniture, industrial, oil and gas, liquid natural gas transport, printed circuit boards, consumer, appliances, electrical power transmission and distribution, recreational sports equipment, and medical appliances markets. The company sells its products through a network of distributors and agents. Huntsman Corporation was founded in 1970 and is headquartered in The Woodlands, Texas.

About Arkema

Arkema S.A. manufactures and sells specialty chemicals and advanced materials worldwide. The company operates in three segments: Adhesive Solutions, Advanced Materials and Coating Solutions, and Intermediates. The Adhesive Solutions segment provides solutions for construction, renovation of buildings, DIY, durable goods, and packaging and non-woven applications; and supplies technologies used in building activities for businesses and individuals, including sealants, tiles, flooring adhesives and waterproofing systems, and technologies used in industry, which include automotive, textiles, glazing, flexible and rigid packaging, and hygiene markets. This segment also offers performance polymers, such as specialty polyamides, PVDF, polyimides, fluorospecialties, and polyetherketoneketone; and performance additives which includes molecular sieves, organic peroxides, thiochemicals, and hydrogen peroxide. The Advance Materials and Coating Solutions segment offers coating solutions, including comprising EU/US acrylics and coating resins; coating additives, such as sartomer photocure resins and coatex rheology additives. This segment also provides decorative paints, industrial coatings, and adhesives; and solutions for applications in the paper, superabsorbent, water treatment and oil and gas extraction, and 3D printing and electronics industries. The Intermediates segment provides fluorogases and acrylics; and industrial intermediate chemicals used in construction, refrigeration and air conditioning, automotive, coatings, and water treatment sectors. Arkema S.A. was incorporated in 2003 and is headquartered in Colombes, France.