China XD Plastics Company Limited (NASDAQ: CXDC) and Fenix Parts (NASDAQ:FENX) are both small-cap basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Profitability

This table compares China XD Plastics Company Limited and Fenix Parts’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China XD Plastics Company Limited 7.52% 16.31% 5.16%
Fenix Parts -5.45% -10.51% -5.49%

Institutional and Insider Ownership

11.4% of China XD Plastics Company Limited shares are held by institutional investors. Comparatively, 52.3% of Fenix Parts shares are held by institutional investors. 66.3% of China XD Plastics Company Limited shares are held by insiders. Comparatively, 16.6% of Fenix Parts shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for China XD Plastics Company Limited and Fenix Parts, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China XD Plastics Company Limited 0 0 0 0 N/A
Fenix Parts 0 1 0 0 2.00

Valuation & Earnings

This table compares China XD Plastics Company Limited and Fenix Parts’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
China XD Plastics Company Limited $1.26 billion 0.18 $201.53 million $1.45 3.17
Fenix Parts $132.10 million 0.12 -$2.11 million ($2.89) -0.28

China XD Plastics Company Limited has higher revenue and earnings than Fenix Parts. Fenix Parts is trading at a lower price-to-earnings ratio than China XD Plastics Company Limited, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

China XD Plastics Company Limited has a beta of 2.46, suggesting that its share price is 146% more volatile than the S&P 500. Comparatively, Fenix Parts has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Summary

China XD Plastics Company Limited beats Fenix Parts on 9 of the 10 factors compared between the two stocks.

China XD Plastics Company Limited Company Profile

China XD Plastics Company Limited (China XD) is a specialty chemical company. The Company is engaged in the research, development, manufacture and sale of modified plastics for automotive applications in China and to a lesser extent, in Dubai, the United Arab Emirates (UAE). The Company operates in the modified plastics segment. Through its subsidiaries, Heilongjiang Xinda Enterprise Group Company Limited (HLJ Xinda Group) and AL Composites Materials FZE (Dubai Composites), the Company manufactures and sells polymer composite materials (including modified plastics), for automotive applications. The Company’s products categories include Modified Polypropylene (PP), Modified Acrylonitrile Butadiene Styrene (ABS), Modified Polyamide 66 (PA66), Modified Polyamide 6 (PA6), Modified Polyoxymethylenes (POM), Modified Polyphenylene Oxide (PPO), Plastic Alloy, Modified Polyphenylene Sulfide (PPS), Modified Polyimide (PI), Modified Polylactic Acid (PLA) and Poly Ether Ether Ketone (PEEK).

Fenix Parts Company Profile

Fenix Parts, Inc. is engaged in auto recycling business. The Company recovers and resells original equipment manufacturer (OEM) parts, components and systems, such as engines, transmissions, radiators, trunks, lamps and seats reclaimed from damaged, totaled or low value vehicles. The Company operates through Automobile Recycling segment. The Company purchases its vehicles primarily at auto salvage auctions. Upon receipt of vehicles, the Company inventories and then dismantles the vehicles and sells the recycled components. Its customers include collision repair shops (body shops), mechanical repair shops, auto dealerships and individual retail customers. The Company also generates a portion of its revenue from the sale as scrap of the unusable parts and materials, from the sale of used cars and motorcycles, the sale of aftermarket parts, and from the sale of extended warranty contracts.

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