NewMarket Corporation (NYSE: NEU) and Innophos Holdings (NASDAQ:IPHS) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for NewMarket Corporation and Innophos Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewMarket Corporation 0 0 0 0 N/A
Innophos Holdings 0 0 1 0 3.00

Innophos Holdings has a consensus target price of $56.00, indicating a potential upside of 13.29%. Given Innophos Holdings’ higher possible upside, analysts plainly believe Innophos Holdings is more favorable than NewMarket Corporation.

Dividends

NewMarket Corporation pays an annual dividend of $7.00 per share and has a dividend yield of 1.6%. Innophos Holdings pays an annual dividend of $1.92 per share and has a dividend yield of 3.9%. NewMarket Corporation pays out 34.0% of its earnings in the form of a dividend. Innophos Holdings pays out 84.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Innophos Holdings has increased its dividend for 8 consecutive years. Innophos Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

55.3% of NewMarket Corporation shares are owned by institutional investors. Comparatively, 94.3% of Innophos Holdings shares are owned by institutional investors. 16.8% of NewMarket Corporation shares are owned by company insiders. Comparatively, 2.3% of Innophos Holdings shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

NewMarket Corporation has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500. Comparatively, Innophos Holdings has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Profitability

This table compares NewMarket Corporation and Innophos Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewMarket Corporation 11.57% 46.94% 16.19%
Innophos Holdings 6.46% 13.79% 7.51%

Earnings & Valuation

This table compares NewMarket Corporation and Innophos Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NewMarket Corporation $2.11 billion 2.42 $402.53 million $20.57 20.99
Innophos Holdings $698.91 million 1.37 $116.47 million $2.28 21.68

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

Summary

NewMarket Corporation beats Innophos Holdings on 10 of the 16 factors compared between the two stocks.

About NewMarket Corporation

NewMarket Corporation is a holding company. The Company is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company operates through petroleum additives segment, which is primarily represented by Afton. The Company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end user applications. The petroleum additives product applications include lubricant additives and fuel additives. The Company’s All other category includes the operations of the TEL business, as well as contract manufacturing and services performed by Ethyl. The Ethyl plant facility is located in Houston, Texas. It is involved in terminal operations related to TEL and other fuel additives.

About Innophos Holdings

Innophos Holdings, Inc. is a producer of nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care and industrial end markets. The Company also provides bioactive mineral and nutritional ingredients. The Company’s segments include Specialty Phosphates US & Canada, Specialty Phosphates Mexico, and Granular Triple Super Phosphate (GTSP) & Other. The Company has four principal product lines: Specialty Ingredients; Food and Technical Grade Purified Phosphoric Acid (PPA); Technical Grade Sodium Tripolyphosphate (STPP), & Detergent Grade PPA, and GTSP & Other. The Company’s bioactive mineral ingredients are mineral-based ingredients for food, beverage and dietary supplement end markets that are manufactured to be readily digestible. The Company has its manufacturing facilities located throughout the United States, Canada, Mexico and China.

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