Shin-Etsu Chemical (OTCMKTS:SHECY – Get Free Report) and Cabot (NYSE:CBT – Get Free Report) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.
Profitability
This table compares Shin-Etsu Chemical and Cabot’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Shin-Etsu Chemical | 19.94% | 10.90% | 9.31% |
| Cabot | 11.14% | 25.68% | 10.92% |
Dividends
Shin-Etsu Chemical pays an annual dividend of $0.25 per share and has a dividend yield of 1.6%. Cabot pays an annual dividend of $1.80 per share and has a dividend yield of 2.3%. Shin-Etsu Chemical pays out 28.4% of its earnings in the form of a dividend. Cabot pays out 23.5% 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. Cabot has increased its dividend for 14 consecutive years. Cabot is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Shin-Etsu Chemical | 1 | 0 | 0 | 0 | 1.00 |
| Cabot | 1 | 1 | 1 | 0 | 2.00 |
Cabot has a consensus price target of $92.33, indicating a potential upside of 20.21%. Given Cabot’s stronger consensus rating and higher possible upside, analysts plainly believe Cabot is more favorable than Shin-Etsu Chemical.
Risk and Volatility
Shin-Etsu Chemical has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Cabot has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.
Earnings and Valuation
This table compares Shin-Etsu Chemical and Cabot”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Shin-Etsu Chemical | $16.82 billion | 3.63 | $3.56 billion | $0.88 | 17.50 |
| Cabot | $3.99 billion | 1.02 | $380.00 million | $7.65 | 10.04 |
Shin-Etsu Chemical has higher revenue and earnings than Cabot. Cabot is trading at a lower price-to-earnings ratio than Shin-Etsu Chemical, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
0.0% of Shin-Etsu Chemical shares are held by institutional investors. Comparatively, 93.2% of Cabot shares are held by institutional investors. 3.0% of Cabot shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Summary
Cabot beats Shin-Etsu Chemical on 11 of the 17 factors compared between the two stocks.
About Shin-Etsu Chemical
Shin-Etsu Chemical Co., Ltd. provides infrastructure, electronics, and functional materials in Japan. It is also involved in processing and specialized related services. The company operates through Infrastructure Materials; Electronics Materials; Functional Materials; and Processing and Specialized Services segments. In addition, it offers cellulose derivatives, synthetic pheromones, aroma chemicals, dielectric and LED/ semiconductor materials, silanes, photoresists, chlorides, caustic soda, liquid fluoroelastomers, polyvinyl chloride and vinyl acetate resin, silicones, and silicones processed goods. Further, the company offers pellicles, photomask blanks, synthetic quartz/ quartz cloth, pyrolytic boron nitride, LIB anode material, and silicon metal. Additionally, it provides rare earth magnets, compound semiconductors, and oxide single crystals. The company was formerly known as Shin-Etsu Nitrogen Fertilizer Co., Ltd. and changed its name to Shin-Etsu Chemical Co., Ltd. in 1940. Shin-Etsu Chemical Co., Ltd. was incorporated in 1926 and is headquartered in Tokyo, Japan.
About Cabot
Cabot Corporation operates as a specialty chemicals and performance materials company. The company operates through two segments, Reinforcement Materials and Performance Chemicals. It offers reinforcing carbons that are used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites solutions. The company also provides specialty carbons for use in inks, coatings, plastics, adhesives, toners, batteries, and displays; conductive additives and fumed alumina used in lead acid and lithium-ion batteries for electric vehicles; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; and fumed alumina for use in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries. In addition, it offers aerogel, a hydrophobic, silica-based particle to use in various thermal insulation and specialty chemical applications; masterbatch and conductive compound products that are used in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; and inkjet colorants for inkjet printing applications. The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.
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