A Schulman (SHLM) vs. Praxair (PX) Financial Review

A Schulman (NASDAQ: SHLM) and Praxair (NYSE:PX) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, risk, valuation and profitability.

Volatility and Risk

A Schulman has a beta of 1.52, indicating that its stock price is 52% more volatile than the S&P 500. Comparatively, Praxair has a beta of 1.03, indicating that its stock price is 3% more volatile than the S&P 500.

Insider and Institutional Ownership

78.7% of A Schulman shares are held by institutional investors. Comparatively, 85.6% of Praxair shares are held by institutional investors. 3.3% of A Schulman shares are held by insiders. Comparatively, 0.2% of Praxair shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

A Schulman pays an annual dividend of $0.82 per share and has a dividend yield of 2.2%. Praxair pays an annual dividend of $3.15 per share and has a dividend yield of 2.0%. A Schulman pays out 65.1% of its earnings in the form of a dividend. Praxair pays out 72.9% 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. Praxair has raised its dividend for 13 consecutive years. A Schulman is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current recommendations for A Schulman and Praxair, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
A Schulman 0 1 1 0 2.50
Praxair 1 5 9 0 2.53

A Schulman presently has a consensus target price of $37.00, indicating a potential upside of 1.09%. Praxair has a consensus target price of $161.38, indicating a potential upside of 3.91%. Given Praxair’s stronger consensus rating and higher probable upside, analysts plainly believe Praxair is more favorable than A Schulman.

Profitability

This table compares A Schulman and Praxair’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
A Schulman 1.78% 28.45% 3.02%
Praxair 10.90% 26.54% 8.40%

Earnings & Valuation

This table compares A Schulman and Praxair’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
A Schulman $2.46 billion 0.44 $33.02 million $1.26 29.05
Praxair $11.44 billion 3.89 $1.25 billion $4.32 35.95

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

Summary

Praxair beats A Schulman on 12 of the 17 factors compared between the two stocks.

About A Schulman

A. Schulman, Inc. is an international supplier of plastic formulations, resins and services, and provides solutions to its customers’ requirements through custom-formulated products. The Company’s customers span a range of markets, such as packaging, mobility, building and construction, electronics and electrical, agriculture, personal care and hygiene, custom services, and sports, home and leisure. The Company’s segments include Europe, Middle East and Africa (EMEA), the United States and Canada (USCAN), Latin America (LATAM), Asia Pacific (APAC) and Engineered Composites (EC). As of August 31, 2016, the Company operated in six product families, including custom performance colors (CPC), engineered composites, Masterbatch solutions, engineered plastics, specialty powders and distribution services. The CPC product family offers powdered, pelletized and liquid color concentrates that are custom-designed for thermoplastic resins.

About Praxair

Praxair, Inc. is an industrial gas company. The Company’s operations are organized into five segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. In addition, it operates its surface technologies business through its subsidiary, Praxair Surface Technologies, Inc., which represents the fifth segment. Its operations consist of two product lines: industrial gases and surface technologies. Its industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases). It also designs, engineers and builds equipment that produces industrial gases primarily for internal use. Its Surface Technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.

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