Critical Review: Nissan Chemical (OTCMKTS:NNCHY) & Sensient Technologies (NYSE:SXT)

Sensient Technologies (NYSE:SXT) and Nissan Chemical (OTCMKTS:NNCHY) are both mid-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, profitability and risk.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Sensient Technologies and Nissan Chemical, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sensient Technologies	0	1	2	0	2.67
Nissan Chemical	0	0	0	0	0.00

Sensient Technologies currently has a consensus target price of $110.00, suggesting a potential upside of 15.78%. Given Sensient Technologies’ stronger consensus rating and higher possible upside, equities analysts plainly believe Sensient Technologies is more favorable than Nissan Chemical.

Profitability

This table compares Sensient Technologies and Nissan Chemical’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sensient Technologies	8.56%	12.56%	6.60%
Nissan Chemical	17.30%	18.88%	13.47%

Institutional & Insider Ownership

90.9% of Sensient Technologies shares are owned by institutional investors. 1.2% of Sensient Technologies shares are owned 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.

Dividends

Sensient Technologies pays an annual dividend of $1.64 per share and has a dividend yield of 1.7%. Nissan Chemical pays an annual dividend of $1.17 per share and has a dividend yield of 3.3%. Sensient Technologies pays out 51.7% of its earnings in the form of a dividend. Nissan Chemical pays out 52.5% 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.

Volatility & Risk

Sensient Technologies has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Nissan Chemical has a beta of -0.02, suggesting that its stock price is 102% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sensient Technologies and Nissan Chemical”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sensient Technologies	$1.56 billion	2.59	$124.67 million	$3.17	29.97
Nissan Chemical	$1.65 billion	2.94	$284.08 million	$2.23	15.91

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

Summary

Sensient Technologies beats Nissan Chemical on 9 of the 16 factors compared between the two stocks.

About Sensient Technologies

Sensient Technologies Corporation, together with its subsidiaries, develops, manufactures, and markets colors, flavors, and other specialty ingredients in North America, Europe, Asia, Australia, South America, and Africa. The company offers flavor-delivery systems, and compounded and blended products; ingredient products, such as essential oils, natural and synthetic flavors, and natural extracts; and chili powder, paprika, and chili pepper, as well as dehydrated vegetables comprising parsley, celery, and spinach to the food, beverage, and personal care industries. It also provides natural and synthetic color systems for use in foods, beverages, pharmaceuticals, and nutraceuticals; colors and other ingredients for personal care, such as active ingredients, solubilizers, and surface treated pigments; pharmaceutical and nutraceutical excipients, including colors, flavors, coatings, and nutraceutical ingredients; and technical colors for industrial applications under the Sensient Food Colors, Sensient Pharmaceutical Coating Systems, Sensient Cosmetic Technologies, and Sensient Specialty Markets trade names. Sensient Technologies Corporation was incorporated in 1882 and is headquartered in Milwaukee, Wisconsin.

About Nissan Chemical

Nissan Chemical Corporation engages in the chemicals, performance materials, agricultural chemicals, and pharmaceuticals businesses in Japan and internationally. The company provides high purity chemicals; AdBlue, an urea solution; ammonia, sulfuric, and nitric acid, as well as concrete and civil engineering-related products; TEPIC, an epoxy compound; Melamine Cyanurate, a salt of melamine and iso cyanuric acid; TEPIC-VL, a liquid epoxy compound; TEPIC-FL, a liquid epoxy material; FOLDI-E101, an epoxy reactive diluent; Ecopromote, a nucleating agents for PLA; Nissan Reishi, a health food; phenylphosphonic acid; HI-LITE, a chlorinated isocyanulate; OPTBEADS, a melamine-formaldehyde resin and silica; and FINEOXOCOL, a saturated fatty alcohol and acid. It also offers performance materials comprising display, semiconductor, and inorganic materials; agricultural chemicals, such as herbicides, insecticides, fungicides, etc. for use on agricultural land, as well as in golf courses and parks; and drug substances for antiparasite drugs for animals. In addition, the company provides pharmaceutical products, such as LIVALO, a antihypercholesterolemic agent; LANDEL and FINTE, a long-acting calcium channel blocker; APIs and intermediaries; and manufacturing and process researching services for pharmaceutical ingredients. Further, it develops healthcare, information and communication materials, and environmental and energy materials. The company was formerly known as Nissan Chemical Industries, Ltd. and changed its name to Nissan Chemical Corporation in July 2018. Nissan Chemical Corporation was founded in 1887 and is headquartered in Tokyo, Japan.