Critical Comparison: NewMarket Corporation (NEU) & Koppers Holdings (KOP)

NewMarket Corporation (NYSE: NEU) and Koppers Holdings (NYSE:KOP) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.

Earnings & Valuation

This table compares NewMarket Corporation and Koppers Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NewMarket Corporation $2.11 billion 2.35 $402.53 million $20.57 20.31
Koppers Holdings $1.41 billion 0.57 $169.90 million $1.98 19.62

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

Profitability

This table compares NewMarket Corporation and Koppers Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewMarket Corporation 11.57% 46.94% 16.19%
Koppers Holdings 3.02% 153.51% 6.24%

Dividends

NewMarket Corporation pays an annual dividend of $7.00 per share and has a dividend yield of 1.7%. Koppers Holdings does not pay a dividend. NewMarket Corporation pays out 34.0% of its earnings in the form of a dividend. NewMarket Corporation has raised its dividend for 5 consecutive years and Koppers Holdings has raised its dividend for 8 consecutive years.

Insider and Institutional Ownership

55.5% of NewMarket Corporation shares are owned by institutional investors. Comparatively, 87.9% of Koppers Holdings shares are owned by institutional investors. 16.8% of NewMarket Corporation shares are owned by company insiders. Comparatively, 3.9% of Koppers Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

NewMarket Corporation has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Koppers Holdings has a beta of 0.97, suggesting that its stock price is 3% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for NewMarket Corporation and Koppers Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewMarket Corporation 0 1 0 0 2.00
Koppers Holdings 0 1 3 0 2.75

Koppers Holdings has a consensus target price of $45.75, suggesting a potential upside of 17.76%. Given Koppers Holdings’ stronger consensus rating and higher possible upside, analysts plainly believe Koppers Holdings is more favorable than NewMarket Corporation.

Summary

NewMarket Corporation beats Koppers Holdings on 9 of the 17 factors compared between the two stocks.

About NewMarket Corporation

NewMarket Corporation is a holding company. The Company is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company operates through petroleum additives segment, which is primarily represented by Afton. The Company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end user applications. The petroleum additives product applications include lubricant additives and fuel additives. The Company’s All other category includes the operations of the TEL business, as well as contract manufacturing and services performed by Ethyl. The Ethyl plant facility is located in Houston, Texas. It is involved in terminal operations related to TEL and other fuel additives.

About Koppers Holdings

Koppers Holdings Inc. is a global integrated provider of treated wood products, wood treatment chemicals and carbon compounds. The Company operates through three segments: Railroad and Utility Products and Services (RUPS), Carbon Materials and Chemicals (CMC) and Performance Chemicals (PC). The RUPS business sells treated and untreated wood products, rail joint bars and services primarily to the railroad markets. The primary products supplied by PC business are copper-based wood preservatives, including micronized copper quaternary and micronized copper azole (MicroPro), micronized pigments (MicroShades) and chromated copper arsenate. Through CMC business, the Company processes coal tar into a range of products, including carbon pitch, creosote and carbon black feedstock. Its products and services are used in a range of markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber and construction industries.

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