Comparing NewMarket (NEU) and A Schulman (SHLM)

NewMarket (NYSE: NEU) and A Schulman (NASDAQ:SHLM) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, risk and valuation.

Earnings and Valuation

This table compares NewMarket and A Schulman’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NewMarket $2.20 billion 2.17 $190.50 million $16.08 25.19
A Schulman $2.46 billion 0.44 $33.02 million $1.26 29.29

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for NewMarket and A Schulman, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewMarket 0 0 0 0 N/A
A Schulman 0 1 1 0 2.50

A Schulman has a consensus target price of $37.00, indicating a potential upside of 0.27%. Given A Schulman’s higher possible upside, analysts plainly believe A Schulman is more favorable than NewMarket.

Profitability

This table compares NewMarket and A Schulman’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewMarket 8.67% 37.86% 13.43%
A Schulman 1.78% 28.45% 3.02%

Risk and Volatility

NewMarket has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, A Schulman has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500.

Insider and Institutional Ownership

58.4% of NewMarket shares are owned by institutional investors. Comparatively, 78.3% of A Schulman shares are owned by institutional investors. 16.8% of NewMarket shares are owned by insiders. Comparatively, 3.3% of A Schulman shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

NewMarket pays an annual dividend of $7.00 per share and has a dividend yield of 1.7%. A Schulman pays an annual dividend of $0.82 per share and has a dividend yield of 2.2%. NewMarket pays out 43.5% of its earnings in the form of a dividend. A Schulman pays out 65.1% 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. NewMarket has raised its dividend for 9 consecutive years.

Summary

NewMarket beats A Schulman on 9 of the 16 factors compared between the two stocks.

About NewMarket

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 A Schulman

A. Schulman, Inc. is an international supplier of plastic formulations, resins and services, and provides solutions to its customers’ requirements through custom-formulated products. The Company’s customers span a range of markets, such as packaging, mobility, building and construction, electronics and electrical, agriculture, personal care and hygiene, custom services, and sports, home and leisure. The Company’s segments include Europe, Middle East and Africa (EMEA), the United States and Canada (USCAN), Latin America (LATAM), Asia Pacific (APAC) and Engineered Composites (EC). As of August 31, 2016, the Company operated in six product families, including custom performance colors (CPC), engineered composites, Masterbatch solutions, engineered plastics, specialty powders and distribution services. The CPC product family offers powdered, pelletized and liquid color concentrates that are custom-designed for thermoplastic resins.

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