Monsanto (NYSE: MON) and Potash Corporation of Saskatchewan (NYSE:POT) are both large-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Dividends

Monsanto pays an annual dividend of $2.16 per share and has a dividend yield of 1.8%. Potash Corporation of Saskatchewan pays an annual dividend of $0.40 per share and has a dividend yield of 2.2%. Monsanto pays out 46.8% of its earnings in the form of a dividend. Potash Corporation of Saskatchewan pays out 81.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Monsanto has increased its dividend for 7 consecutive years.

Volatility and Risk

Monsanto has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Potash Corporation of Saskatchewan has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500.

Institutional and Insider Ownership

75.0% of Monsanto shares are owned by institutional investors. Comparatively, 59.2% of Potash Corporation of Saskatchewan shares are owned by institutional investors. 0.8% of Monsanto shares are owned by company insiders. Comparatively, 3.1% of Potash Corporation of Saskatchewan shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Monsanto and Potash Corporation of Saskatchewan, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monsanto 0 7 8 0 2.53
Potash Corporation of Saskatchewan 1 11 7 0 2.32

Monsanto presently has a consensus target price of $123.62, suggesting a potential upside of 5.31%. Potash Corporation of Saskatchewan has a consensus target price of $17.94, suggesting a potential downside of 0.21%. Given Monsanto’s stronger consensus rating and higher probable upside, analysts plainly believe Monsanto is more favorable than Potash Corporation of Saskatchewan.

Profitability

This table compares Monsanto and Potash Corporation of Saskatchewan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monsanto 14.11% 45.26% 11.37%
Potash Corporation of Saskatchewan 9.41% 5.52% 2.60%

Valuation and Earnings

This table compares Monsanto and Potash Corporation of Saskatchewan’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Monsanto $14.52 billion 3.55 $4.19 billion $4.62 25.41
Potash Corporation of Saskatchewan $3.82 billion 3.95 $1.25 billion $0.49 36.69

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

Summary

Monsanto beats Potash Corporation of Saskatchewan on 13 of the 17 factors compared between the two stocks.

Monsanto Company Profile

Monsanto Company (Monsanto), along with its subsidiaries, is a provider of agricultural products for farmers. The Company provides seeds, biotechnology trait products, herbicides and digital agriculture tools to farmers. The Company operates through two segments: Seeds and Genomics, and Agricultural Productivity. Through its Seeds and Genomics segment, the Company produces seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and it develops biotechnology traits that assist farmers in controlling insects and weeds and digital agriculture to assist farmers in decision-making. The Seeds and Genomics segment offers products, such as Germplasm and Biotechnology traits. Through its Agricultural Productivity segment, the Company manufactures Roundup brand herbicides and other herbicides and provides lawn-and-garden herbicide products for the residential market.

Potash Corporation of Saskatchewan Company Profile

Potash Corporation of Saskatchewan Inc. (PCS) is a fertilizer producer producing a range of primary crop nutrients, such as potash, nitrogen and phosphate. The Company operates through three segments: potash, nitrogen and phosphate. As of December 31, 2016, it owned and operated five potash operations in Saskatchewan and owned one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. Its phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, phosphate feed and industrial acid, which is used in food products and industrial processes. It has phosphate mines and mineral processing plant complexes in Florida and North Carolina. As of December 31, 2016, the Company had four phosphate feed plants in the United States.

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