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

Dividends

Albemarle Corporation pays an annual dividend of $1.28 per share and has a dividend yield of 0.9%. Eastman Chemical pays an annual dividend of $2.04 per share and has a dividend yield of 2.3%. Albemarle Corporation pays out 16.4% of its earnings in the form of a dividend. Eastman Chemical pays out 32.3% 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. Albemarle Corporation has raised its dividend for 5 consecutive years and Eastman Chemical has raised its dividend for 13 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

83.7% of Albemarle Corporation shares are held by institutional investors. Comparatively, 82.1% of Eastman Chemical shares are held by institutional investors. 0.7% of Albemarle Corporation shares are held by company insiders. Comparatively, 1.1% of Eastman Chemical shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Albemarle Corporation 0 6 11 0 2.65
Eastman Chemical 0 7 5 0 2.42

Albemarle Corporation currently has a consensus target price of $122.65, indicating a potential downside of 12.88%. Eastman Chemical has a consensus target price of $92.73, indicating a potential upside of 4.40%. Given Eastman Chemical’s higher probable upside, analysts plainly believe Eastman Chemical is more favorable than Albemarle Corporation.

Volatility & Risk

Albemarle Corporation has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Albemarle Corporation 31.49% 11.59% 5.42%
Eastman Chemical 10.11% 22.54% 6.74%

Valuation & Earnings

This table compares Albemarle Corporation and Eastman Chemical’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Albemarle Corporation $2.81 billion 5.53 $744.58 million $7.80 18.05
Eastman Chemical $9.20 billion 1.40 $2.15 billion $6.32 14.05

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

Summary

Albemarle Corporation beats Eastman Chemical on 9 of the 17 factors compared between the two stocks.

Albemarle Corporation Company Profile

Albemarle Corporation is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consist of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services. As of December 31, 2016, the Company and its joint ventures operated 31 production and research and development (R&D) facilities, as well as a number of administrative and sales offices, around the world.

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.

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