Huntsman Corporation (NYSE: HUN) and Cabot Corporation (NYSE:CBT) are both mid-cap basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, profitability, valuation, dividends and risk.

Volatility & Risk

Huntsman Corporation has a beta of 2.79, suggesting that its stock price is 179% more volatile than the S&P 500. Comparatively, Cabot Corporation has a beta of 1.09, suggesting that its stock price is 9% more volatile than the S&P 500.

Profitability

This table compares Huntsman Corporation and Cabot Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Huntsman Corporation 4.33% 30.04% 5.34%
Cabot Corporation 8.61% 16.03% 7.24%

Insider and Institutional Ownership

75.9% of Huntsman Corporation shares are owned by institutional investors. Comparatively, 84.3% of Cabot Corporation shares are owned by institutional investors. 19.0% of Huntsman Corporation shares are owned by company insiders. Comparatively, 2.5% of Cabot Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Huntsman Corporation and Cabot Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Huntsman Corporation 0 1 6 0 2.86
Cabot Corporation 0 1 4 0 2.80

Huntsman Corporation currently has a consensus target price of $29.14, suggesting a potential upside of 6.05%. Cabot Corporation has a consensus target price of $60.60, suggesting a potential upside of 14.04%. Given Cabot Corporation’s higher possible upside, analysts clearly believe Cabot Corporation is more favorable than Huntsman Corporation.

Dividends

Huntsman Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 1.8%. Cabot Corporation pays an annual dividend of $1.26 per share and has a dividend yield of 2.4%. Huntsman Corporation pays out 28.4% of its earnings in the form of a dividend. Cabot Corporation pays out 35.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cabot Corporation has raised its dividend for 5 consecutive years. Cabot Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Huntsman Corporation and Cabot Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Huntsman Corporation $9.84 billion 0.67 $1.18 billion $1.76 15.61
Cabot Corporation $2.61 billion 1.27 $488.00 million $3.57 14.89

Huntsman Corporation has higher revenue and earnings than Cabot Corporation. Cabot Corporation is trading at a lower price-to-earnings ratio than Huntsman Corporation, indicating that it is currently the more affordable of the two stocks.

Summary

Cabot Corporation beats Huntsman Corporation on 9 of the 17 factors compared between the two stocks.

Huntsman Corporation Company Profile

Huntsman Corporation is a manufacturer of differentiated organic chemical products and of inorganic chemical products. The Company operates all of its businesses through its subsidiary, Huntsman International LLC (Huntsman International). The Company operates through five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects, and Pigments and Additives. Its Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments produce differentiated organic chemical products and its Pigments and Additives segment produces inorganic chemical products. The Company’s products are used in a range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non-durable consumer products, digital inks, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries.

Cabot Corporation Company Profile

Cabot Corporation is a global specialty chemicals and performance materials company. The Company operates through four business segments: reinforcement materials, performance chemicals, purification solutions and specialty fluids. Reinforcement materials’ rubber grade carbon blacks are used to enhance the physical properties of the systems and applications in which they are incorporated. Its rubber blacks products are used in tires and industrial products. Performance Chemicals consists of two businesses: specialty carbons and formulations business, and metal oxides business. Purification Solutions’ activated carbon products are used for the purification of water, air and pharmaceuticals, among others, as either a colorant or a decolorizing agent in the production of food and beverage applications. Its specialty fluids segment produces and markets cesium formate as a drilling and completion fluid for use in high pressure and high temperature oil and gas well construction.

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