Eastman Chemical (EMN) and Air Products and Chemicals (APD) Critical Analysis
Eastman Chemical (NYSE: EMN) and Air Products and Chemicals (NYSE:APD) are both large-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.
Valuation and Earnings
This table compares Eastman Chemical and Air Products and Chemicals’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Eastman Chemical||$9.20 billion||1.41||$2.15 billion||$6.32||14.19|
|Air Products and Chemicals||$9.95 billion||3.35||$3.18 billion||$13.33||11.47|
Air Products and Chemicals has higher revenue and earnings than Eastman Chemical. Air Products and Chemicals is trading at a lower price-to-earnings ratio than Eastman Chemical, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations and price targets for Eastman Chemical and Air Products and Chemicals, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Air Products and Chemicals||1||5||7||0||2.46|
Eastman Chemical currently has a consensus target price of $91.89, indicating a potential upside of 2.44%. Air Products and Chemicals has a consensus target price of $157.15, indicating a potential upside of 2.78%. Given Air Products and Chemicals’ higher probable upside, analysts plainly believe Air Products and Chemicals is more favorable than Eastman Chemical.
Volatility and Risk
Eastman Chemical has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Air Products and Chemicals has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.
This table compares Eastman Chemical and Air Products and Chemicals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Air Products and Chemicals||34.63%||17.23%||8.25%|
Insider and Institutional Ownership
82.1% of Eastman Chemical shares are held by institutional investors. Comparatively, 87.9% of Air Products and Chemicals shares are held by institutional investors. 1.1% of Eastman Chemical shares are held by insiders. Comparatively, 0.4% of Air Products and Chemicals shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Eastman Chemical pays an annual dividend of $2.04 per share and has a dividend yield of 2.3%. Air Products and Chemicals pays an annual dividend of $3.80 per share and has a dividend yield of 2.5%. Eastman Chemical pays out 32.3% of its earnings in the form of a dividend. Air Products and Chemicals pays out 28.5% 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. Eastman Chemical has increased its dividend for 5 consecutive years and Air Products and Chemicals has increased its dividend for 34 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Air Products and Chemicals beats Eastman Chemical on 13 of the 17 factors compared between the two stocks.
Eastman Chemical Company Profile
Eastman Chemical Company (Eastman) is an advanced materials and specialty additives company. The Company’s segments include Additives & Functional Products (AFP), Advanced Materials (AM), Chemical Intermediates (CI), and Fibers. In the AFP segment, it manufactures chemicals for products in the coatings, tires, consumables, building and construction, industrial applications, including solar energy markets, animal nutrition, care chemicals, crop protection, and energy markets. In the AM segment, it produces and markets its polymers, films, and plastics with differentiated performance properties for end uses in transportation, consumables, building and construction, durable goods, and health and wellness products. The CI segment leverages large scale and vertical integration from the cellulose and acetyl, olefins, and alkylamines streams to support its specialty operating segments. Its product lines in Fibers segment include Acetate Tow, Acetate Yarn and Acetyl Chemical Products.
Air Products and Chemicals Company Profile
Air Products and Chemicals, Inc., is an industrial gases company. The Company’s Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company operates through five segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, and Corporate and other.
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