Financial Analysis: Innospec (IOSP) vs. Cabot Corporation (CBT)
Innospec (NASDAQ: IOSP) and Cabot Corporation (NYSE:CBT) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitabiliy, valuation, risk, analyst recommendations and institutional ownership.
Risk & Volatility
Innospec has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500. Comparatively, Cabot Corporation has a beta of 1.05, meaning that its share price is 5% more volatile than the S&P 500.
This table compares Innospec and Cabot Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider and Institutional Ownership
90.5% of Innospec shares are owned by institutional investors. Comparatively, 85.7% of Cabot Corporation shares are owned by institutional investors. 2.0% of Innospec shares are owned by insiders. Comparatively, 2.5% of Cabot Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Innospec pays an annual dividend of $0.76 per share and has a dividend yield of 1.2%. Cabot Corporation pays an annual dividend of $1.26 per share and has a dividend yield of 2.4%. Innospec pays out 23.4% of its earnings in the form of a dividend. Cabot Corporation pays out 35.3% 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. Cabot Corporation has raised its dividend for 5 consecutive years. Cabot Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent ratings and recommmendations for Innospec and Cabot Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Innospec currently has a consensus price target of $62.00, indicating a potential downside of 0.96%. Cabot Corporation has a consensus price target of $59.60, indicating a potential upside of 13.46%. Given Cabot Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Cabot Corporation is more favorable than Innospec.
Valuation & Earnings
This table compares Innospec and Cabot Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Innospec||$965.60 million||1.56||$138.30 million||$3.25||19.26|
|Cabot Corporation||$2.61 billion||1.25||$482.00 million||$3.57||14.71|
Cabot Corporation has higher revenue and earnings than Innospec. Cabot Corporation is trading at a lower price-to-earnings ratio than Innospec, indicating that it is currently the more affordable of the two stocks.
Cabot Corporation beats Innospec on 11 of the 17 factors compared between the two stocks.
Innospec Company Profile
Innospec Inc. is a specialty chemicals company engaged in developing, manufacturing, blending, marketing and supplying of specialty chemicals for use as fuel additives and ingredients for personal care, home care, agrochemical, mining and other applications and oilfield chemicals. The Company operates through four business segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives. Its Fuel Specialties develops, manufactures, blends, markets and supplies various specialty chemical products that are used as additives for a range of fuels. Its Performance Chemicals provides technology-based solutions. Its Oilfield Services business supplies drilling, completion and production chemicals. Its Octane Additives business manufactures a fuel additive for use in automotive gasoline and provides services in respect of environmental remediation. Its customers include oil and gas exploration and production companies, fuel users, and oil refiners among others.
Cabot Corporation Company Profile
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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