Reviewing Westlake Chemical Partners (WLKP) and FutureFuel (FF)

Westlake Chemical Partners (NYSE: WLKP) and FutureFuel (NYSE:FF) are both small-cap basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitability, earnings and institutional ownership.

Earnings & Valuation

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This table compares Westlake Chemical Partners and FutureFuel’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westlake Chemical Partners $1.17 billion 0.64 $48.67 million $1.72 13.60
FutureFuel $275.03 million 1.95 $23.51 million N/A N/A

Westlake Chemical Partners has higher revenue and earnings than FutureFuel.

Risk & Volatility

Westlake Chemical Partners has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500. Comparatively, FutureFuel has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500.

Insider & Institutional Ownership

48.0% of Westlake Chemical Partners shares are owned by institutional investors. Comparatively, 44.5% of FutureFuel shares are owned by institutional investors. 43.3% of FutureFuel shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Westlake Chemical Partners and FutureFuel’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westlake Chemical Partners 4.15% 5.13% 3.18%
FutureFuel 8.55% 3.32% 2.67%

Analyst Recommendations

This is a summary of recent ratings for Westlake Chemical Partners and FutureFuel, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westlake Chemical Partners 0 3 3 0 2.50
FutureFuel 0 0 0 0 N/A

Westlake Chemical Partners presently has a consensus price target of $26.63, indicating a potential upside of 13.78%. Given Westlake Chemical Partners’ higher possible upside, research analysts plainly believe Westlake Chemical Partners is more favorable than FutureFuel.

Dividends

Westlake Chemical Partners pays an annual dividend of $1.55 per share and has a dividend yield of 6.6%. FutureFuel pays an annual dividend of $0.24 per share and has a dividend yield of 2.0%. Westlake Chemical Partners pays out 90.1% 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 increased its dividend for 3 consecutive years. Westlake Chemical Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Westlake Chemical Partners beats FutureFuel on 9 of the 15 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.

About FutureFuel

FutureFuel Corp. is the holding company of FutureFuel Chemical Company. FutureFuel Chemical Company manufactures diversified chemical products, bio-based products consisting of biofuels, and bio-based specialty chemical products. FutureFuel Chemical Company conducts its operations through two segments: chemicals and biofuels. The chemicals segment manufactures a diversified listing of chemical products that are sold to third-party customers. The biofuels segment primarily produces and sells biodiesel and petrodiesel blends to its customers. The biofuels segment also involves the buying, selling and shipping of refined petroleum products on common carrier pipelines. Custom chemicals manufacturing involves producing various products for strategic customers, generally under long-term contracts. Its products also include a family of acetal-based solvents, including diethoxymethane, dimethoxymethane, dibutoxymethane, glycerol formal and phenol sulfonic acid.

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