Dow Chemical (NYSE: DOW) and Solutia (NYSE:SOA) are both mid-cap basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.
Earnings & Valuation
This table compares Dow Chemical and Solutia’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
This is a breakdown of current ratings and price targets for Dow Chemical and Solutia, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Dow Chemical currently has a consensus price target of $72.14, suggesting a potential upside of 8.24%.
Dow Chemical pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. Solutia does not pay a dividend. Dow Chemical pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Solutia has raised its dividend for 6 consecutive years.
This table compares Dow Chemical and Solutia’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
67.8% of Dow Chemical shares are held by institutional investors. 0.9% of Dow Chemical shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Dow Chemical beats Solutia on 8 of the 10 factors compared between the two stocks.
About Dow Chemical
The Dow Chemical Company manufactures and supplies products used primarily as raw materials in the manufacture of customer products and services. The Company’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils; Consumer Solutions, which consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses; Infrastructure Solutions, which consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses; Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses, and Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.
Solutia Inc., together with its subsidiaries, is a global manufacturer of performance materials and specialty chemicals used in a range of consumer and industrial applications, including interlayers and aftermarket film for automotive and architectural glass; chemicals that promote safety and durability in tires, and encapsulants, coatings and specialty chemicals used in a variety of electronic, industrial and energy solutions. The Company operates in three segments: Advanced Interlayers; Performance Films; and Technical Specialties. On November 23, 2011, the Company acquired Southwall Technologies Inc. (Southwall). In April 2011, the Company sold its Santoweb and Vocol businesses to Rhein Chemie, a wholly owned subsidiary of LANXESS AG.
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