Sociedad Quimica y Minera (NYSE: SQM) and Potash Corporation of Saskatchewan (NYSE:POT) are both large-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.

Dividends

Sociedad Quimica y Minera pays an annual dividend of $1.48 per share and has a dividend yield of 2.5%. Potash Corporation of Saskatchewan pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Sociedad Quimica y Minera pays out 114.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Potash Corporation of Saskatchewan pays out 72.7% of its earnings in the form of a dividend. Sociedad Quimica y Minera has raised its dividend for 3 consecutive years. Sociedad Quimica y Minera is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

13.6% of Sociedad Quimica y Minera shares are held by institutional investors. Comparatively, 57.0% of Potash Corporation of Saskatchewan shares are held by institutional investors. 3.1% of Potash Corporation of Saskatchewan shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for Sociedad Quimica y Minera and Potash Corporation of Saskatchewan, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sociedad Quimica y Minera 1 5 1 0 2.00
Potash Corporation of Saskatchewan 1 4 7 0 2.50

Sociedad Quimica y Minera presently has a consensus target price of $49.00, indicating a potential downside of 17.98%. Potash Corporation of Saskatchewan has a consensus target price of $19.66, indicating a potential upside of 0.97%. Given Potash Corporation of Saskatchewan’s stronger consensus rating and higher probable upside, analysts plainly believe Potash Corporation of Saskatchewan is more favorable than Sociedad Quimica y Minera.

Profitability

This table compares Sociedad Quimica y Minera and Potash Corporation of Saskatchewan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sociedad Quimica y Minera 16.28% 14.90% 8.05%
Potash Corporation of Saskatchewan 10.21% 5.04% 2.43%

Risk and Volatility

Sociedad Quimica y Minera has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Potash Corporation of Saskatchewan has a beta of 0.46, meaning that its stock price is 54% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sociedad Quimica y Minera and Potash Corporation of Saskatchewan’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sociedad Quimica y Minera $2.08 billion 7.56 $845.92 million $1.29 46.31
Potash Corporation of Saskatchewan $3.89 billion 4.21 $1.25 billion $0.55 35.40

Potash Corporation of Saskatchewan has higher revenue and earnings than Sociedad Quimica y Minera. Potash Corporation of Saskatchewan is trading at a lower price-to-earnings ratio than Sociedad Quimica y Minera, indicating that it is currently the more affordable of the two stocks.

Summary

Sociedad Quimica y Minera beats Potash Corporation of Saskatchewan on 9 of the 17 factors compared between the two stocks.

About Sociedad Quimica y Minera

Sociedad Quimica y Minera de Chile S.A. (SQM), is a producer of potassium nitrate and iodine. The Company produces specialty plant nutrients, iodine derivatives, lithium and its derivatives, potassium chloride, potassium sulfate and certain industrial chemicals. Its segments include specialty plant nutrients, industrial chemicals, iodine and derivatives, lithium and derivatives, potassium, and other products and services. Specialty plant nutrients are fertilizers that enable farmers to improve yields and the quality of certain crops. Industrial chemicals have a range of applications in chemical processes, such as the manufacturing of glass and industrial nitrates. Iodine and its derivatives are used in the X-ray contrast media and biocides industries, among others. Lithium and its derivatives are used in batteries, greases and frits for production of ceramics. Potassium chloride is a commodity fertilizer that is produced and sold by the Company across the world.

About Potash Corporation of Saskatchewan

Potash Corporation of Saskatchewan Inc. (PCS) is a fertilizer producer producing a range of primary crop nutrients, such as potash, nitrogen and phosphate. The Company operates through three segments: potash, nitrogen and phosphate. As of December 31, 2016, it owned and operated five potash operations in Saskatchewan and owned one in New Brunswick. Its nitrogen operations involve the production of nitrogen fertilizers and nitrogen feed and industrial products, including ammonia, urea, nitrogen solutions, ammonium nitrate and nitric acid. It has nitrogen facilities in Georgia, Louisiana, Ohio and Trinidad. Its phosphate operations include the manufacture and sale of solid and liquid phosphate fertilizers, phosphate feed and industrial acid, which is used in food products and industrial processes. It has phosphate mines and mineral processing plant complexes in Florida and North Carolina. As of December 31, 2016, the Company had four phosphate feed plants in the United States.

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