Innospec (NASDAQ: NXEO) and Nexeo Solutions (NASDAQ:NXEO) are both small-cap basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, valuation, institutional ownership and dividends.
Innospec pays an annual dividend of $1.76 per share and has a dividend yield of 2.3%. Nexeo Solutions does not pay a dividend. Innospec pays out 37.8% of its earnings in the form of a dividend. Innospec has increased its dividend for 4 consecutive years.
Valuation and Earnings
This table compares Innospec and Nexeo Solutions’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Innospec||$1.31 billion||1.43||$61.80 million||$4.66||16.42|
|Nexeo Solutions||$3.64 billion||0.24||$14.40 million||$0.33||30.03|
Innospec has higher earnings, but lower revenue than Nexeo Solutions. Innospec is trading at a lower price-to-earnings ratio than Nexeo Solutions, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings for Innospec and Nexeo Solutions, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Innospec presently has a consensus price target of $86.00, indicating a potential upside of 12.42%. Nexeo Solutions has a consensus price target of $12.50, indicating a potential upside of 26.14%. Given Nexeo Solutions’ higher possible upside, analysts clearly believe Nexeo Solutions is more favorable than Innospec.
Volatility and Risk
Innospec has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Nexeo Solutions has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.
Institutional & Insider Ownership
93.2% of Innospec shares are held by institutional investors. Comparatively, 95.2% of Nexeo Solutions shares are held by institutional investors. 2.0% of Innospec shares are held by company insiders. Comparatively, 0.6% of Nexeo Solutions shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares Innospec and Nexeo Solutions’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Innospec beats Nexeo Solutions on 10 of the 15 factors compared between the two stocks.
Innospec Company Profile
Innospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals for use as fuel additives, ingredients for personal care, home care, agrochemical, mining and other applications, and oilfield chemicals worldwide. It operates through four segments: Fuel Specialties, Performance Chemicals, Oilfield Services, and Octane Additives. The Fuel Specialties segment offers a range of specialty chemical products used as additives in various fuels. This segment's products are used in the operation of automotive, marine, and aviation engines; power station generators; and heating oil. The Performance Chemicals segment provides technology-based solutions for its customers' processes or products focused in the personal care, home care, agrochemical, and mining markets. The Oilfield Services segment develops and markets products to prevent loss of mud in drilling operations; chemical solutions for fracturing, stimulation, and completion operations; and products for oil and gas production, which enable flow assurance and asset integrity. The Octane Additives segment produces and sells tetra ethyl lead (TEL) for use in automotive gasoline. This segment is also involved in an environmental remediation business that manages the cleanup of redundant TEL plants. The company serves oil and gas exploration and production companies, oil refineries, fuel manufacturers and users, formulators of personal care and home care, agrochemical and mining formulations, and other chemical and industrial companies. The company was formerly known as Octel Corp. and changed its name to Innospec Inc. in January 2006. Innospec Inc. was founded in 1938 and is headquartered in Englewood, Colorado.
Nexeo Solutions Company Profile
Nexeo Solutions, Inc. operates as a chemical and plastic products distributor in North America, Europe, the Middle East, Africa, and Asia. The company operates through Chemicals, Plastics, and Environmental Services segments. It provides approximately 22,000 products used in various industries, including household, industrial and institutional, lubricants, architectural coatings, adhesives, sealants, elastomers, automotive, healthcare, personal care, oil and gas, and construction. The company was formerly known as WL Ross Holding Corp. and changed its name to Nexeo Solutions, Inc. in June 2016. Nexeo Solutions, Inc. was founded in 2014 and is based in The Woodlands, Texas.
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