Univar (NYSE: UNVR) and Nexeo Solutions (NASDAQ:NXEO) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Insider & Institutional Ownership

96.7% of Univar shares are held by institutional investors. Comparatively, 94.1% of Nexeo Solutions shares are held by institutional investors. 1.8% of Univar shares are held by insiders. Comparatively, 0.1% of Nexeo Solutions shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Univar and Nexeo Solutions’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Univar $8.06 billion 0.48 $473.50 million ($0.51) -54.27
Nexeo Solutions $3.51 billion 0.19 $151.10 million $0.12 61.67

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

Profitability

This table compares Univar and Nexeo Solutions’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Univar -0.85% 15.46% 2.42%
Nexeo Solutions -0.30% 4.94% 0.39%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Univar and Nexeo Solutions, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Univar 1 1 4 0 2.50
Nexeo Solutions 0 2 1 0 2.33

Univar presently has a consensus target price of $32.60, suggesting a potential upside of 17.77%. Nexeo Solutions has a consensus target price of $9.00, suggesting a potential upside of 21.62%. Given Nexeo Solutions’ higher probable upside, analysts plainly believe Nexeo Solutions is more favorable than Univar.

Summary

Univar beats Nexeo Solutions on 9 of the 12 factors compared between the two stocks.

About Univar

Univar Inc. is a distributor of commodity and specialty chemicals. The Company operates through four segments: Univar USA (USA); Univar Canada (Canada); Univar Europe and the Middle East and Africa (EMEA), and Rest of World. The Company’s USA segment supplies a range of commodity and specialty chemicals, as well as services to a range of end markets, including manufacturing and industrial production sectors in the United States. In the United States, it services these multiple end markets with one-to-three day order times from nearby facilities. It repackages and blends bulk chemicals for shipment by its transportation fleet, as well as common carriers. Its Canadian operations are regionally focused, supplying a range of commodity and specialty chemicals to the local customer base. In Eastern Canada, it primarily focuses on industrial markets, such as food ingredients and products, pharmaceutical ingredients and finished products, coatings and adhesives, and chemical manufacturing.

About Nexeo Solutions

Nexeo Solutions Inc, formerly WL Ross Holding Corp., is global distributor of chemicals products in North America and Asia, and plastics products in North America, Europe, the Middle East and Africa (EMEA) and Asia. The Company provides services, such as custom blending, packaging and re-packaging, private-label manufacturing and product testing in the form of chemical analysis, product performance analysis and product development. It also provides environmental services, including waste collection, recovery and arrangement for disposal services and recycling in North America, primarily in the United States, through its Environmental Services line of business. The Company operates in three segments: Chemicals, Plastics and Environmental Services.

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