Critical Review: Sociedad Quimica y Minera (SQM) vs. Potash Co. of Saskatchewan (POT)

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

Risk & Volatility

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

Valuation and Earnings

This table compares Potash Co. of Saskatchewan and Sociedad Quimica y Minera’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Potash Co. of Saskatchewan $4.46 billion 3.70 $323.00 million $0.53 37.08
Sociedad Quimica y Minera $1.94 billion 7.38 $278.29 million $1.51 36.03

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

Institutional and Insider Ownership

59.8% of Potash Co. of Saskatchewan shares are held by institutional investors. Comparatively, 12.7% of Sociedad Quimica y Minera shares are held by institutional investors. 3.1% of Potash Co. of Saskatchewan shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Potash Co. of Saskatchewan 10.21% 5.01% 2.43%
Sociedad Quimica y Minera 18.52% 17.58% 9.51%

Dividends

Potash Co. of Saskatchewan pays an annual dividend of $0.40 per share and has a dividend yield of 2.0%. Sociedad Quimica y Minera pays an annual dividend of $1.48 per share and has a dividend yield of 2.7%. Potash Co. of Saskatchewan pays out 75.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sociedad Quimica y Minera pays out 98.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Potash Co. of Saskatchewan and Sociedad Quimica y Minera, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Potash Co. of Saskatchewan 1 4 6 0 2.45
Sociedad Quimica y Minera 0 4 1 0 2.20

Potash Co. of Saskatchewan presently has a consensus price target of $19.22, suggesting a potential downside of 2.18%. Sociedad Quimica y Minera has a consensus price target of $49.00, suggesting a potential downside of 9.94%. Given Potash Co. of Saskatchewan’s stronger consensus rating and higher possible upside, analysts plainly believe Potash Co. of Saskatchewan is more favorable than Sociedad Quimica y Minera.

Summary

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

Potash Co. of Saskatchewan Company Profile

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.

Sociedad Quimica y Minera Company Profile

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.

Receive News & Ratings for Potash Co. of Saskatchewan Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Potash Co. of Saskatchewan and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply