Critical Analysis: Brenntag (OTCMKTS:BNTGY) and Gulf Resources (NASDAQ:GURE)

Gulf Resources (NASDAQ:GURE) and Brenntag (OTCMKTS:BNTGY) are both basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Institutional & Insider Ownership

3.3% of Gulf Resources shares are owned by institutional investors. 3.2% of Gulf Resources shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Gulf Resources and Brenntag”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gulf Resources	$7.66 million	0.90	-$58.94 million	($48.05)	-0.09
Brenntag	$17.57 billion	0.50	$580.22 million	$0.64	19.03

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

Analyst Ratings

This is a summary of current ratings for Gulf Resources and Brenntag, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gulf Resources	1	0	0	0	1.00
Brenntag	3	6	0	0	1.67

Brenntag has a consensus price target of $12.80, indicating a potential upside of 5.09%. Given Brenntag’s stronger consensus rating and higher possible upside, analysts plainly believe Brenntag is more favorable than Gulf Resources.

Volatility and Risk

Gulf Resources has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, Brenntag has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Profitability

This table compares Gulf Resources and Brenntag’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gulf Resources	-286.77%	-20.62%	-17.50%
Brenntag	2.66%	9.14%	3.69%

Summary

Brenntag beats Gulf Resources on 10 of the 13 factors compared between the two stocks.

About Gulf Resources

Gulf Resources, Inc., through its subsidiaries, manufactures and trades bromine and crude salt, chemical products, and natural gas in the People’s Republic of China. The company operates through four segments: Bromine, Crude salt, Chemical products, and Natural gas segments. It also provides bromine for use in bromine compounds, intermediates in organic synthesis, brominated flame retardants, fumigants, water purification compounds, dyes, medicines, and disinfectants. In addition, the company offers crude salt for use as a material in alkali and chlorine alkali production for use in the chemical, food and beverage, and other industries. In addition, it manufactures and sells chemical products for use in oil and gas field exploration, oil and gas distribution, oil field drilling, papermaking chemical agents, and inorganic chemicals, as well as materials that are used for human and animal antibiotics. The company is based in Shouguang, the People’s Republic of China.

About Brenntag

Brenntag SE purchases and supplies various industrial and specialty chemicals, and ingredients in Germany, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates in two segments, Brenntag Essentials and Brenntag Specialties. It provides just-in-time delivery, product mixing, blending, repackaging, inventory management, and drum return handling. The company serves customers in various end-market industries, including nutrition, pharma, personal care, water treatment, and lubricants; and home, industrial, and institutional markets, as well as coatings and constructions, polymers, and rubber industries. The company was founded in 1874 and is based in Essen, Germany.