Orion Engineered Carbons S.A (NYSE: OEC) and Innospec (NASDAQ:IOSP) are both small-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.

Valuation & Earnings

This table compares Orion Engineered Carbons S.A and Innospec’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Orion Engineered Carbons S.A $1.36 billion 0.93 $268.66 million $0.85 25.06
Innospec $1.06 billion 1.26 $150.30 million $3.13 17.72

Orion Engineered Carbons S.A has higher revenue and earnings than Innospec. Innospec is trading at a lower price-to-earnings ratio than Orion Engineered Carbons S.A, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Orion Engineered Carbons S.A has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500. Comparatively, Innospec has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Dividends

Orion Engineered Carbons S.A pays an annual dividend of $0.75 per share and has a dividend yield of 3.5%. Innospec pays an annual dividend of $0.76 per share and has a dividend yield of 1.4%. Orion Engineered Carbons S.A pays out 88.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Innospec pays out 24.3% of its earnings in the form of a dividend.

Insider & Institutional Ownership

37.2% of Orion Engineered Carbons S.A shares are held by institutional investors. Comparatively, 91.7% of Innospec shares are held by institutional investors. 2.0% of Innospec shares are held by 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 breakdown of recent ratings for Orion Engineered Carbons S.A and Innospec, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Orion Engineered Carbons S.A 0 1 2 0 2.67
Innospec 0 0 1 0 3.00

Orion Engineered Carbons S.A presently has a consensus price target of $23.33, suggesting a potential upside of 9.55%. Innospec has a consensus price target of $65.00, suggesting a potential upside of 17.22%. Given Innospec’s stronger consensus rating and higher probable upside, analysts plainly believe Innospec is more favorable than Orion Engineered Carbons S.A.

Profitability

This table compares Orion Engineered Carbons S.A and Innospec’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Orion Engineered Carbons S.A 4.12% 148.13% 8.81%
Innospec 7.22% 14.77% 8.39%

Summary

Innospec beats Orion Engineered Carbons S.A on 9 of the 16 factors compared between the two stocks.

Orion Engineered Carbons S.A Company Profile

Orion Engineered Carbons S.A. is a producer of carbon black. The Company operates through two segments: Specialty Carbon Black and Rubber Carbon Black. The Specialty Carbon Black segment is engaged in the production of specialty carbon black. The Rubber Carbon Black segment is involved in the production of rubber carbon black. As of December 31, 2016, it operated a diversified carbon black business with over 280 specialty carbon black grades and approximately 80 rubber carbon black grades. Carbon black is used as a pigment and as a performance additive in coatings, polymers, printing and special applications (specialty carbon black), and in the reinforcement of rubber in tires and mechanical rubber goods (rubber carbon black). As of December 31, 2016, it operated a global platform of 13 production facilities in Europe, North and South America, Asia and South Africa and three sales companies, as well as one jointly-owned production plant in Germany.

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.

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