Trinseo (NYSE: TSE) and Sensient Technologies (NYSE:SXT) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitability, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Trinseo and Sensient Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trinseo 0 2 3 0 2.60
Sensient Technologies 0 0 2 0 3.00

Trinseo currently has a consensus target price of $76.25, indicating a potential upside of 8.77%. Sensient Technologies has a consensus target price of $89.15, indicating a potential upside of 16.08%. Given Sensient Technologies’ stronger consensus rating and higher probable upside, analysts clearly believe Sensient Technologies is more favorable than Trinseo.

Dividends

Trinseo pays an annual dividend of $1.44 per share and has a dividend yield of 2.1%. Sensient Technologies pays an annual dividend of $1.32 per share and has a dividend yield of 1.7%. Trinseo pays out 22.5% of its earnings in the form of a dividend. Sensient Technologies pays out 54.3% 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. Trinseo has increased its dividend for 5 consecutive years. Trinseo is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Trinseo and Sensient Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trinseo 6.78% 65.80% 13.58%
Sensient Technologies 7.89% 17.34% 8.85%

Earnings and Valuation

This table compares Trinseo and Sensient Technologies’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trinseo $3.72 billion 0.82 $318.31 million $6.39 10.97
Sensient Technologies $1.38 billion 2.41 $126.25 million $2.43 31.60

Trinseo has higher revenue and earnings than Sensient Technologies. Trinseo is trading at a lower price-to-earnings ratio than Sensient Technologies, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

96.9% of Trinseo shares are owned by institutional investors. Comparatively, 90.2% of Sensient Technologies shares are owned by institutional investors. 0.3% of Trinseo shares are owned by insiders. Comparatively, 1.0% of Sensient Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Trinseo has a beta of 2.33, meaning that its stock price is 133% more volatile than the S&P 500. Comparatively, Sensient Technologies has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Summary

Trinseo beats Sensient Technologies on 11 of the 17 factors compared between the two stocks.

Trinseo Company Profile

Trinseo S.A. is a materials company engaged in the manufacture and marketing of synthetic rubber, latex and plastics. The Company’s segments include Latex Binders, Synthetic Rubber, Performance Plastics, Basic Plastics, Feedstocks and Americas Styrenics. The Latex Binders segment produces styrene-butadiene latex (SB latex) and other latex polymers and binders. The Synthetic Rubber segment produces synthetic rubber products used in tires, impact modifiers and technical rubber products. The Performance Plastics segment produces compounds and blends and specialized acrylonitrile-butadiene-styrene (ABS) grades. The Basic Plastics segment produces styrenic polymers, including polystyrene, basic ABS, and styrene-acrylonitrile (SAN) products, as well as polycarbonate (PC). The Feedstocks segment includes its production and procurement of styrene monomer outside of North America. The Americas Styrenics segment consists of the operations of its joint venture, Americas Styrenics LLC.

Sensient Technologies Company Profile

Sensient Technologies Corporation is a manufacturer and marketer of colors, flavors and fragrances. The Company uses technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, specialty inks and colors, and other specialty and fine chemicals. The Company’s three segments include the Flavors & Fragrances Group and the Color Group, which are managed on a product-and-services basis, and the Asia Pacific Group, which is managed on a geographic basis. The Company’s principal products include flavors, flavor enhancers and bionutrients; fragrances, aroma chemicals and essential oils; natural ingredients, including dehydrated vegetables and other food ingredients; natural and synthetic food and beverage colors; cosmetic colors and ingredients and pharmaceutical excipients and ingredients, and technical colors, specialty inks and colors, and specialty dyes and pigments.

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