Cosan Limited (NYSE: CZZ) and Sprague Resources (NYSE:SRLP) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Cosan Limited and Sprague Resources, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cosan Limited 0 1 0 0 2.00
Sprague Resources 0 0 2 0 3.00

Sprague Resources has a consensus target price of $33.00, indicating a potential upside of 25.48%. Given Sprague Resources’ stronger consensus rating and higher possible upside, analysts plainly believe Sprague Resources is more favorable than Cosan Limited.

Profitability

This table compares Cosan Limited and Sprague Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cosan Limited 0.73% -0.15% -0.05%
Sprague Resources 1.77% 29.64% 4.95%

Institutional & Insider Ownership

43.3% of Cosan Limited shares are held by institutional investors. Comparatively, 24.6% of Sprague Resources shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Cosan Limited pays an annual dividend of $0.08 per share and has a dividend yield of 1.0%. Sprague Resources pays an annual dividend of $2.43 per share and has a dividend yield of 9.2%. Sprague Resources pays out 119.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprague Resources has increased its dividend for 2 consecutive years. Sprague Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Cosan Limited and Sprague Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Cosan Limited $3.84 billion 0.55 $1.23 billion N/A N/A
Sprague Resources $2.62 billion 0.23 $105.38 million $2.03 12.96

Cosan Limited has higher revenue and earnings than Sprague Resources.

Volatility and Risk

Cosan Limited has a beta of 2.31, meaning that its stock price is 131% more volatile than the S&P 500. Comparatively, Sprague Resources has a beta of 1.4, meaning that its stock price is 40% more volatile than the S&P 500.

Summary

Sprague Resources beats Cosan Limited on 8 of the 15 factors compared between the two stocks.

Cosan Limited Company Profile

Cosan Limited (Cosan) is a holding company. The Company’s segments include Raizen Energia, Raizen Combustiveis, COMGAS, Cosan Logistica, Lubricants and Other business. The Company’s other business include other investments, in addition to the corporate activities. The Company offers Logistics services, including transportation, port loading and storage of sugar, leasing or lending of locomotives, wagons and other railway equipment, through its subsidiaries Rumo Logistica Operadora Multimodal S.A. (Rumo), logistic segment (Logistic). The Company is also engaged in production and distribution of lubricants, through its indirect subsidiaries Cosan Lubrificantes e Especialidades S.A. (Moove) and Comma Oil & Chemicals Ltd. (Comma), under the Mobil licensed trademark in Brazil, Bolivia, Uruguay and Paraguay, in addition to the European and Asian market using the Comma brand and corporate activities (Lubricants).

Sprague Resources Company Profile

Sprague Resources LP is engaged in the purchase, storage, distribution and sale of refined products and natural gas, and provides storage and handling services for a range of materials. The Company operates through four segments: refined products, which purchases a range of refined products, such as heating oil, diesel fuel, residual fuel oil, asphalt, kerosene, jet fuel and gasoline from refining companies, trading organizations and producers; natural gas, which purchases natural gas from natural gas producers and trading companies, and sells and distributes natural gas to commercial and industrial customers in the Northeast and Mid-Atlantic United States; materials handling, which offloads, stores and prepares for delivery a range of customer-owned products, including asphalt, clay slurry, coal and heavy equipment, and other operations, which include the purchase and distribution of coal, certain commercial trucking activities and the heating equipment service business.

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