Analyzing Solutia (SOA) & Dow Chemical (DWDP)
Solutia (NYSE: SOA) and Dow Chemical (NYSE:DWDP) are both mid-cap diversified chemicals companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, analyst recommendations, dividends, institutional ownership and profitability.
Dow Chemical pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. Solutia does not pay a dividend. Dow Chemical pays out 73.1% of its earnings in the form of a dividend.
This is a breakdown of current ratings and target prices for Solutia and Dow Chemical, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Dow Chemical has a consensus price target of $79.61, suggesting a potential upside of 12.00%.
Valuation & Earnings
This table compares Solutia and Dow Chemical’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Dow Chemical||$48.16 billion||3.45||$4.32 billion||$2.08||34.17|
Dow Chemical has higher revenue and earnings than Solutia. Solutia is trading at a lower price-to-earnings ratio than Dow Chemical, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
68.8% of Dow Chemical shares are held by institutional investors. 0.9% of Dow Chemical 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.
This table compares Solutia and Dow Chemical’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Dow Chemical beats Solutia on 9 of the 10 factors compared between the two stocks.
Solutia Company Profile
Solutia Inc., together with its subsidiaries, is a global manufacturer of performance materials and specialty chemicals used in a range of consumer and industrial applications, including interlayers and aftermarket film for automotive and architectural glass; chemicals that promote safety and durability in tires, and encapsulants, coatings and specialty chemicals used in a variety of electronic, industrial and energy solutions. The Company operates in three segments: Advanced Interlayers; Performance Films; and Technical Specialties. On November 23, 2011, the Company acquired Southwall Technologies Inc. (Southwall). In April 2011, the Company sold its Santoweb and Vocol businesses to Rhein Chemie, a wholly owned subsidiary of LANXESS AG.
Dow Chemical Company Profile
DowDuPont Inc. is a holding company formed through the merger of equals between The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont). The Company’s business divisions include Agriculture division, Material Science division, and a Specialty Products division. The Agriculture Division offers a complete portfolio of products and technologies, traits and crop protection. The Materials Science Division provides solutions, such as packaging, transportation, infrastructure and customer care. The Specialty Products division provides solution for industrial, safety, energy, food, nutrition, construction, electronics and consumer goods industries. The company provides solutions to a range of markets, including aerospace, automotive, consumer electronics, military, printing, renewable energy, semiconductors, child nutrition, dietary supplements, carpet and apparel, fertilizer, and oil and gas/energy.
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