Analyzing W.R. Grace & Co. (GRA) & KMG Chemicals (KMG)
W.R. Grace & Co. (NYSE: GRA) and KMG Chemicals (NYSE:KMG) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.
Insider & Institutional Ownership
84.7% of W.R. Grace & Co. shares are owned by institutional investors. Comparatively, 73.7% of KMG Chemicals shares are owned by institutional investors. 1.3% of W.R. Grace & Co. shares are owned by insiders. Comparatively, 6.9% of KMG Chemicals shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Valuation and Earnings
This table compares W.R. Grace & Co. and KMG Chemicals’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|W.R. Grace & Co.||$1.67 billion||3.00||$371.30 million||$1.99||36.86|
|KMG Chemicals||$312.48 million||2.06||$51.47 million||$1.80||30.04|
W.R. Grace & Co. has higher revenue and earnings than KMG Chemicals. KMG Chemicals is trading at a lower price-to-earnings ratio than W.R. Grace & Co., indicating that it is currently the more affordable of the two stocks.
This table compares W.R. Grace & Co. and KMG Chemicals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|W.R. Grace & Co.||8.20%||43.88%||6.20%|
This is a summary of current ratings and target prices for W.R. Grace & Co. and KMG Chemicals, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|W.R. Grace & Co.||0||3||8||0||2.73|
W.R. Grace & Co. currently has a consensus target price of $79.55, suggesting a potential upside of 8.43%. KMG Chemicals has a consensus target price of $37.00, suggesting a potential downside of 31.58%. Given W.R. Grace & Co.’s higher possible upside, equities analysts clearly believe W.R. Grace & Co. is more favorable than KMG Chemicals.
Volatility & Risk
W.R. Grace & Co. has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, KMG Chemicals has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.
W.R. Grace & Co. pays an annual dividend of $0.84 per share and has a dividend yield of 1.1%. KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. W.R. Grace & Co. pays out 42.2% of its earnings in the form of a dividend. KMG Chemicals pays out 6.7% 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.
W.R. Grace & Co. beats KMG Chemicals on 11 of the 16 factors compared between the two stocks.
W.R. Grace & Co. Company Profile
W. R. Grace & Co. (Grace) is engaged in the production and sale of specialty chemicals and specialty materials. The Company operates in two segments: Grace Catalysts Technologies and Grace Materials Technologies. The Grace Catalysts Technologies segment includes catalysts and related products and technologies used in refining, petrochemical and other chemical manufacturing applications. The Grace Materials Technologies segment includes specialty materials, including silica-based and silica-alumina-based materials, used in coatings, consumer, industrial, and pharmaceutical applications. It Grace Catalysts Technologies segment produces and sells catalysts and related products and technologies used in refining, petrochemical and other chemical manufacturing applications, including Fluid catalytic cracking catalysts (FCC), Hydroprocessing catalysts (HPC), and Polyolefin catalysts and catalyst supports.
KMG Chemicals Company Profile
KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.
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