Sociedad Quimica y Minera (NYSE: SQM) and Agrium (NYSE:AGU) are both large-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitabiliy, institutional ownership, risk and dividends.

Profitability

This table compares Sociedad Quimica y Minera and Agrium’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sociedad Quimica y Minera 15.53% 13.99% 7.57%
Agrium 4.25% 9.72% 3.56%

Risk & Volatility

Sociedad Quimica y Minera has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500. Comparatively, Agrium has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sociedad Quimica y Minera and Agrium, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sociedad Quimica y Minera 0 4 1 0 2.20
Agrium 1 7 8 0 2.44

Sociedad Quimica y Minera presently has a consensus price target of $36.00, suggesting a potential downside of 14.83%. Agrium has a consensus price target of $103.67, suggesting a potential upside of 4.71%. Given Agrium’s stronger consensus rating and higher possible upside, analysts plainly believe Agrium is more favorable than Sociedad Quimica y Minera.

Dividends

Sociedad Quimica y Minera pays an annual dividend of $1.16 per share and has a dividend yield of 2.7%. Agrium pays an annual dividend of $3.50 per share and has a dividend yield of 3.5%. Sociedad Quimica y Minera pays out 94.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Agrium pays out 83.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sociedad Quimica y Minera has raised its dividend for 3 consecutive years and Agrium has raised its dividend for 5 consecutive years. Agrium is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

16.0% of Sociedad Quimica y Minera shares are held by institutional investors. Comparatively, 69.0% of Agrium shares are held by institutional investors. 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.

Earnings & Valuation

This table compares Sociedad Quimica y Minera and Agrium’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sociedad Quimica y Minera $2.08 billion 5.35 $810.31 million $1.23 34.37
Agrium $13.66 billion 1.00 $1.57 billion $4.21 23.52

Agrium has higher revenue and earnings than Sociedad Quimica y Minera. Agrium is trading at a lower price-to-earnings ratio than Sociedad Quimica y Minera, indicating that it is currently the more affordable of the two stocks.

Summary

Agrium beats Sociedad Quimica y Minera on 10 of the 16 factors compared between the two stocks.

About Sociedad Quimica y Minera

Sociedad Quimica y Minera de Chile S.A. (SQM), is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services. Specialty plant nutrients are fertilizers that enable farmers to improve yields and the quality of certain crops. Industrial chemicals have a range of applications in chemical processes, such as the manufacturing of glass and industrial nitrates. Iodine and its derivatives are used in the X-ray contrast media and biocides industries, among others. Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.

About Agrium

Agrium Inc. is a retailer of agricultural products and services in the United States, Canada, Australia, Argentina, Brazil, Chile and Uruguay and a multi-national producer and wholesale marketer of nutrients for agricultural and industrial markets. The Company’s segments include Retail and Wholesale. As of December 31, 2016, its Retail business unit marketed crop nutrients, crop protection products, seed, merchandise, application and other agronomic services through 1,500 retail locations in the United States, Canada, Australia, Argentina, Brazil, Chile and Uruguay. Its Wholesale business unit manufactures, mines and markets a range of nutrients, including nitrogen-based, potash and phosphate-based crop nutrient products. As of December 31, 2016, its Wholesale business unit owned and operated five North American nitrogen facilities, four located in Alberta, Canada and one in Borger, Texas, United States.

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