Critical Contrast: Enzymotec (ENZY) vs. Airgas (ARG)

Enzymotec (NASDAQ: ENZY) and Airgas (NYSE:ARG) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Dividends

Airgas pays an annual dividend of $2.40 per share and has a dividend yield of 1.7%. Enzymotec does not pay a dividend. Airgas pays out 53.0% of its earnings in the form of a dividend. Enzymotec has increased its dividend for 15 consecutive years.

Insider & Institutional Ownership

15.7% of Enzymotec shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Enzymotec and Airgas’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enzymotec $47.70 million 5.82 -$2.92 million ($0.27) -43.89
Airgas N/A N/A N/A $4.53 31.56

Airgas has lower revenue, but higher earnings than Enzymotec. Enzymotec is trading at a lower price-to-earnings ratio than Airgas, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Enzymotec and Airgas’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enzymotec 2.32% 1.24% 0.84%
Airgas 5.98% 15.44% 5.04%

Analyst Recommendations

This is a summary of recent ratings and price targets for Enzymotec and Airgas, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enzymotec 0 2 0 0 2.00
Airgas 0 0 0 0 N/A

Enzymotec currently has a consensus target price of $11.75, suggesting a potential downside of 0.84%. Given Enzymotec’s higher probable upside, equities analysts clearly believe Enzymotec is more favorable than Airgas.

Summary

Airgas beats Enzymotec on 6 of the 11 factors compared between the two stocks.

About Enzymotec

Enzymotec Ltd. is a nutritional ingredients and medical foods company. The Company’s technologies, research expertise and clinical validation process enables it to develop solutions across a range of products. The Company operates in two segments: Nutrition segment and VAYA Pharma segment. Both of the Company’s segments offer a range of products that leverage its lipid-related offerings. Its product suite addresses the entire human life-cycle, from infancy to old age, and comprises ingredients in products ranging from infant formula to nutritional supplements, as well as branded medical foods, sold only under a doctor’s supervision. It markets its product portfolio to established global consumer companies and physicians and target large and growing consumer health and wellness markets. The Company’s clinically-validated products include bio-functional lipid-based compounds designed to address dietary needs, medical disorders and common diseases.

About Airgas

Airgas, Inc. is a supplier of industrial, medical and specialty gases, and hard goods, such as welding equipment and related products. The Company is also a producer of atmospheric gases, carbon dioxide, dry ice and nitrous oxide and a supplier of safety products, refrigerants, ammonia products and process chemicals. It operates through two segments: Distribution and All Other Operations. The Distribution segment offers a portfolio of related gas and hard goods products and services to the end customers. The All Other Operations segment consists of five business units which manufacture or distribute carbon dioxide, dry ice, nitrous oxide, ammonia and refrigerant gases. It also offers supply chain management services and solutions, and product and process technical support across many customer segments. It markets its products and services through multiple sales channels, including branch-based sales representatives, retail stores and strategic customer account programs, among others.

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