Eastman Chemical (NYSE: EMN) and Quaker Chemical Corporation (NYSE:KWR) are both mid-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Earnings and Valuation

This table compares Eastman Chemical and Quaker Chemical Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Eastman Chemical $9.20 billion 1.43 $2.15 billion $6.32 14.40
Quaker Chemical Corporation $777.77 million 2.60 $106.55 million $3.93 38.60

Eastman Chemical has higher revenue and earnings than Quaker Chemical Corporation. Eastman Chemical is trading at a lower price-to-earnings ratio than Quaker Chemical Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Eastman Chemical and Quaker Chemical Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eastman Chemical 10.11% 22.54% 6.74%
Quaker Chemical Corporation 6.73% 15.52% 9.26%

Dividends

Eastman Chemical pays an annual dividend of $2.04 per share and has a dividend yield of 2.2%. Quaker Chemical Corporation pays an annual dividend of $1.42 per share and has a dividend yield of 0.9%. Eastman Chemical pays out 32.3% of its earnings in the form of a dividend. Quaker Chemical Corporation pays out 36.1% 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 Quaker Chemical Corporation has increased its dividend for 7 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Eastman Chemical and Quaker Chemical Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eastman Chemical 0 4 6 0 2.60
Quaker Chemical Corporation 0 1 0 0 2.00

Eastman Chemical currently has a consensus price target of $91.89, suggesting a potential upside of 0.98%. Quaker Chemical Corporation has a consensus price target of $153.00, suggesting a potential upside of 0.86%. Given Eastman Chemical’s stronger consensus rating and higher probable upside, research analysts clearly believe Eastman Chemical is more favorable than Quaker Chemical Corporation.

Risk & Volatility

Eastman Chemical has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500. Comparatively, Quaker Chemical Corporation has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.

Insider and Institutional Ownership

82.1% of Eastman Chemical shares are held by institutional investors. Comparatively, 82.8% of Quaker Chemical Corporation shares are held by institutional investors. 1.1% of Eastman Chemical shares are held by insiders. Comparatively, 3.6% of Quaker Chemical Corporation shares are held by 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.

Summary

Eastman Chemical beats Quaker Chemical Corporation on 11 of the 17 factors compared between the two stocks.

About Eastman Chemical

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.

About Quaker Chemical Corporation

Quaker Chemical Corporation is a provider of process fluids, chemical specialties, and technical expertise to a range of industries, including steel, aluminum, mining, aerospace, tube and pipe, cans and others. The Company’s segments include North America, Europe, Middle East and Africa (EMEA), Asia/Pacific and South America. It develops, produces, and markets a range of formulated chemical specialty products and offers chemical management services. Its products and services include rolling lubricants (used by manufacturers of steel in the hot and cold rolling of steel and by manufacturers of aluminum in the hot rolling of aluminum); machining and grinding compounds (used by metalworking customers in cutting, shaping, and grinding metal parts, which require special treatment to enable them to tolerate the manufacturing process, achieve closer tolerance, and improve tool life), and hydraulic fluids (used by steel, metalworking, and other customers to operate hydraulic equipment).

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