Stepan (NYSE: SCL) and OCI Partners (NYSE:OCIP) are both small-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.
Institutional & Insider Ownership
62.5% of Stepan shares are owned by institutional investors. Comparatively, 15.0% of OCI Partners shares are owned by institutional investors. 13.1% of Stepan shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a summary of current ratings and recommmendations for Stepan and OCI Partners, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Stepan currently has a consensus target price of $36.25, suggesting a potential downside of 58.68%. OCI Partners has a consensus target price of $7.00, suggesting a potential downside of 5.41%. Given OCI Partners’ higher possible upside, analysts plainly believe OCI Partners is more favorable than Stepan.
Stepan pays an annual dividend of $0.82 per share and has a dividend yield of 0.9%. OCI Partners pays an annual dividend of $0.48 per share and has a dividend yield of 6.5%. Stepan pays out 21.5% of its earnings in the form of a dividend. OCI Partners pays out -252.6% 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. OCI Partners has raised its dividend for 49 consecutive years. OCI Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Stepan and OCI Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares Stepan and OCI Partners’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Stepan||$1.83 billion||1.08||$207.56 million||$3.81||23.03|
|OCI Partners||$298.87 million||2.15||$93.85 million||($0.19)||-38.95|
Stepan has higher revenue and earnings than OCI Partners. OCI Partners is trading at a lower price-to-earnings ratio than Stepan, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
Stepan has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500. Comparatively, OCI Partners has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.
Stepan beats OCI Partners on 11 of the 17 factors compared between the two stocks.
Stepan Company produces specialty and intermediate chemicals, which are sold to other manufacturers and used in a range of end products. The Company operates through three segments: Surfactants, Polymers and Specialty Products. The Company’s principal markets include manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products and plastics. Its Surfactants segment offers products, which are principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Its Polymers segment includes polyurethane polyols, polyester resins and phthalic anhydride. Its Specialty Products segment includes flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications.
About OCI Partners
OCI Partners LP owns and operates an integrated methanol and ammonia production facility that is located on the Texas Gulf Coast near Beaumont. The Company has an annual methanol production capacity of approximately 912,500 metric tons and an annual ammonia production capacity of approximately 331,000 metric tons. It purchases natural gas from third parties and processes the natural gas into synthesis gas, which it then further processes in the production of methanol and ammonia. It stores and sells the processed methanol and ammonia to industrial and commercial customers for further processing or distribution. Its methanol production unit comprises Foster-Wheeler-designed twin steam methane reformers for synthesis gas production, over two Lurgi-designed parallel low-pressure, water-cooled reactors and approximately four distillation columns. The Haldor-Topsoe-designed ammonia synthesis loop at its facility processes hydrogen produced by methanol production process.
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