Critical Comparison: Ingevity (NGVT) versus Westlake Chemical Partners (WLKP)
Westlake Chemical Partners (NYSE: WLKP) and Ingevity (NYSE:NGVT) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, valuation, analyst recommendations, institutional ownership and dividends.
Institutional and Insider Ownership
55.2% of Westlake Chemical Partners shares are owned by institutional investors. Comparatively, 91.4% of Ingevity shares are owned by institutional investors. 0.1% of Ingevity shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This is a summary of current recommendations for Westlake Chemical Partners and Ingevity, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Westlake Chemical Partners||0||1||2||0||2.67|
Westlake Chemical Partners presently has a consensus price target of $27.75, suggesting a potential upside of 18.59%. Ingevity has a consensus price target of $76.00, suggesting a potential upside of 6.35%. Given Westlake Chemical Partners’ higher possible upside, analysts clearly believe Westlake Chemical Partners is more favorable than Ingevity.
Westlake Chemical Partners pays an annual dividend of $1.50 per share and has a dividend yield of 6.4%. Ingevity does not pay a dividend. Westlake Chemical Partners pays out 95.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westlake Chemical Partners has raised its dividend for 2 consecutive years.
This table compares Westlake Chemical Partners and Ingevity’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Westlake Chemical Partners||3.80%||4.73%||2.86%|
Earnings and Valuation
This table compares Westlake Chemical Partners and Ingevity’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Westlake Chemical Partners||$986.74 million||0.64||$40.94 million||$1.57||14.90|
|Ingevity||$908.30 million||3.31||$35.20 million||$2.22||32.19|
Westlake Chemical Partners has higher revenue and earnings than Ingevity. Westlake Chemical Partners is trading at a lower price-to-earnings ratio than Ingevity, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Westlake Chemical Partners has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, Ingevity has a beta of 1.78, meaning that its stock price is 78% more volatile than the S&P 500.
Ingevity beats Westlake Chemical Partners on 12 of the 17 factors compared between the two stocks.
About Westlake Chemical Partners
Westlake Chemical Partners LP is a limited partnership formed by Westlake Chemical Corporation (Westlake). The Company operates, acquires and develops ethylene production facilities and other assets. Its business and operations are conducted through Westlake Chemical OpCo LP (OpCo). OpCo sells ethylene to Westlake and others, as well as sells co-products of ethylene production, including propylene, crude butadiene, pyrolysis gasoline and hydrogen. As of December 31, 2016, OpCo’s assets included three ethylene production facilities, which primarily convert ethane into ethylene, and a 200-mile ethylene pipeline. As of December 31, 2016, OpCo owned two ethylene production facilities at Westlake’s Lake Charles, Louisiana site (Petro 1 and Petro 2, collectively Lake Charles Olefins), and one ethylene production facility at Westlake’s Calvert City, Kentucky site (Calvert City Olefins), with an annual capacity of approximately 630 million pounds.
Ingevity Corporation is a manufacturer of specialty chemicals and high performance carbon materials. The Company is also a manufacturer of activated carbon used in gasoline vapor emission control systems in cars, trucks, motorcycles and boats. The Company operates through two segments: Performance Materials and Performance Chemicals. The Performance Materials segment primarily produces automotive carbon products used in gasoline vapor emission control systems in cars, trucks, motorcycles and boats. The Performance Chemicals segment develops, manufactures and sells a range of specialty chemicals primarily derived from co-products of the Kraft pulping process. Its products are used in a range of applications, including asphalt paving, oil exploration and production, agrochemicals, adhesives, lubricants, publication inks and automotive components that reduce gasoline vapor emissions.
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