Stepan (NYSE: SCL) and Minerals Technologies (NYSE:MTX) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Volatility & Risk

Stepan has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500. Comparatively, Minerals Technologies has a beta of 2.2, suggesting that its share price is 120% more volatile than the S&P 500.

Dividends

Stepan pays an annual dividend of $0.82 per share and has a dividend yield of 1.1%. Minerals Technologies pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Stepan pays out 21.5% of its earnings in the form of a dividend. Minerals Technologies pays out 4.5% 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. Minerals Technologies has increased its dividend for 49 consecutive years.

Institutional and Insider Ownership

62.6% of Stepan shares are held by institutional investors. Comparatively, 94.6% of Minerals Technologies shares are held by institutional investors. 13.1% of Stepan shares are held by company insiders. Comparatively, 2.2% of Minerals Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Stepan and Minerals Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Stepan 4.85% 14.95% 7.28%
Minerals Technologies 9.62% 15.04% 5.56%

Valuation and Earnings

This table compares Stepan and Minerals Technologies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Stepan $1.83 billion 0.95 $207.56 million $3.81 20.23
Minerals Technologies $1.62 billion 1.38 $349.20 million $4.40 14.47

Minerals Technologies has higher revenue, but lower earnings than Stepan. Minerals Technologies is trading at a lower price-to-earnings ratio than Stepan, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Stepan and Minerals Technologies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Stepan 0 2 1 1 2.75
Minerals Technologies 0 0 1 0 3.00

Stepan presently has a consensus price target of $36.25, indicating a potential downside of 52.96%. Minerals Technologies has a consensus price target of $80.00, indicating a potential upside of 25.69%. Given Minerals Technologies’ stronger consensus rating and higher probable upside, analysts plainly believe Minerals Technologies is more favorable than Stepan.

Summary

Minerals Technologies beats Stepan on 11 of the 17 factors compared between the two stocks.

Stepan Company Profile

Stepan Company produces specialty and intermediate chemicals, which are sold to other manufacturers and used in a range of end products. The Company operates through three segments: Surfactants, Polymers and Specialty Products. The Company’s principal markets include manufacturers of cleaning and washing compounds (including detergents, shampoos, fabric softeners, toothpastes and household cleaners), paints, cosmetics, food, beverages, nutritional supplements, agricultural products and plastics. Its Surfactants segment offers products, which are principal ingredients in consumer and industrial cleaning products, such as detergents for washing clothes, dishes, carpets, floors and walls, as well as shampoos and body washes. Its Polymers segment includes polyurethane polyols, polyester resins and phthalic anhydride. Its Specialty Products segment includes flavors, emulsifiers and solubilizers used in food, flavoring, nutritional supplement and pharmaceutical applications.

Minerals Technologies Company Profile

Minerals Technologies Inc. is a resource- and technology-based company that develops, produces and markets a range of specialty mineral, mineral-based and synthetic mineral products and supporting systems and services around the world. It operates through five segments. The Specialty Minerals produces and sells the synthetic mineral product precipitated calcium carbonate (PCC) and processed mineral product quicklime (lime). The Refractories segment produces and markets monolithic and shaped refractory materials and specialty products, services and application and measurement equipment, and calcium metal and metallurgical wire products. The Performance Materials segment is a supplier of bentonite and bentonite-related product. The Construction Technologies segment provides products for non-residential construction, environmental and infrastructure projects. The Energy Services segment offers a range of services for off-shore filtration and well testing to the oil and gas industry.

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