Innospec (NASDAQ: IOSP) and OM Group (NYSE:OMG) are both small-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, institutional ownership and valuation.

Profitability

This table compares Innospec and OM Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Innospec 7.22% 14.77% 8.39%
OM Group 3.68% 4.22% 2.58%

Valuation and Earnings

This table compares Innospec and OM Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Innospec $1.06 billion 1.30 $150.30 million $3.13 18.26
OM Group N/A N/A N/A N/A N/A

Innospec has higher revenue and earnings than OM Group.

Dividends

Innospec pays an annual dividend of $0.76 per share and has a dividend yield of 1.3%. OM Group does not pay a dividend. Innospec pays out 24.3% of its earnings in the form of a dividend.

Institutional & Insider Ownership

91.5% of Innospec shares are owned by institutional investors. 2.0% of Innospec shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Innospec and OM Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Innospec 0 1 0 0 2.00
OM Group 0 0 0 0 N/A

Innospec currently has a consensus target price of $62.00, suggesting a potential upside of 8.49%. Given Innospec’s higher possible upside, equities research analysts plainly believe Innospec is more favorable than OM Group.

Summary

Innospec beats OM Group on 8 of the 9 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.

OM Group Company Profile

OM Group, Inc. is a United States-based industrial company. The Company is engaged in serving global markets, including automotive systems, electronic devices, aerospace and defense, industrial and medical. It operates in three business segments: Magnetic Technologies, Battery Technologies and Specialty Chemicals. Its Magnetic Technologies segment develops, manufactures and distributes industrial-use magnetic materials and related products to an array of end markets, including automotive systems, electrical installation technology, industrial, retail and renewable energy. The Company’s Battery Technologies segment provides batteries, battery management systems, and energetic devices for defense, space and medical markets. The Company’s Specialty Chemicals segment develops, produces and supplies chemicals for electronic applications, industrial applications including coatings, composites and tire, and photomasks used by customers to produce semiconductors and related products.

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