Sensient Technologies Corporation (NYSE: SXT) and Cabot Corporation (NYSE:CBT) are both mid-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitability, valuation and earnings.
Insider & Institutional Ownership
88.6% of Sensient Technologies Corporation shares are held by institutional investors. Comparatively, 84.3% of Cabot Corporation shares are held by institutional investors. 1.0% of Sensient Technologies Corporation shares are held by company insiders. Comparatively, 2.5% of Cabot Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Sensient Technologies Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Cabot Corporation pays an annual dividend of $1.26 per share and has a dividend yield of 2.1%. Sensient Technologies Corporation pays out 49.6% of its earnings in the form of a dividend. Cabot Corporation pays out 33.1% 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. Sensient Technologies Corporation has raised its dividend for 5 consecutive years and Cabot Corporation has raised its dividend for 5 consecutive years. Cabot Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Sensient Technologies Corporation and Cabot Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Sensient Technologies Corporation||7.89%||17.34%||8.85%|
Volatility & Risk
Sensient Technologies Corporation has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Cabot Corporation has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.
This is a breakdown of current recommendations for Sensient Technologies Corporation and Cabot Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Sensient Technologies Corporation||0||0||2||0||3.00|
Sensient Technologies Corporation currently has a consensus target price of $89.15, indicating a potential upside of 17.23%. Cabot Corporation has a consensus target price of $60.33, indicating a potential downside of 1.03%. Given Sensient Technologies Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Sensient Technologies Corporation is more favorable than Cabot Corporation.
Earnings & Valuation
This table compares Sensient Technologies Corporation and Cabot Corporation’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sensient Technologies Corporation||$1.36 billion||2.45||$247.07 million||$2.42||31.43|
|Cabot Corporation||$2.61 billion||1.45||$488.00 million||$3.81||16.00|
Cabot Corporation has higher revenue and earnings than Sensient Technologies Corporation. Cabot Corporation is trading at a lower price-to-earnings ratio than Sensient Technologies Corporation, indicating that it is currently the more affordable of the two stocks.
Cabot Corporation beats Sensient Technologies Corporation on 9 of the 16 factors compared between the two stocks.
About Sensient Technologies Corporation
Sensient Technologies Corporation is a manufacturer and marketer of colors, flavors and fragrances. The Company uses technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, specialty inks and colors, and other specialty and fine chemicals. The Company’s three segments include the Flavors & Fragrances Group and the Color Group, which are managed on a product-and-services basis, and the Asia Pacific Group, which is managed on a geographic basis. The Company’s principal products include flavors, flavor enhancers and bionutrients; fragrances, aroma chemicals and essential oils; natural ingredients, including dehydrated vegetables and other food ingredients; natural and synthetic food and beverage colors; cosmetic colors and ingredients and pharmaceutical excipients and ingredients, and technical colors, specialty inks and colors, and specialty dyes and pigments.
About Cabot Corporation
Cabot Corporation is a global specialty chemicals and performance materials company. The Company operates through four business segments: reinforcement materials, performance chemicals, purification solutions and specialty fluids. Reinforcement materials’ rubber grade carbon blacks are used to enhance the physical properties of the systems and applications in which they are incorporated. Its rubber blacks products are used in tires and industrial products. Performance Chemicals consists of two businesses: specialty carbons and formulations business, and metal oxides business. Purification Solutions’ activated carbon products are used for the purification of water, air and pharmaceuticals, among others, as either a colorant or a decolorizing agent in the production of food and beverage applications. Its specialty fluids segment produces and markets cesium formate as a drilling and completion fluid for use in high pressure and high temperature oil and gas well construction.
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