Critical Analysis: Mativ (NYSE:MATV) and NewMarket (NYSE:NEU)

Mativ (NYSE:MATV) and NewMarket (NYSE:NEU) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Institutional and Insider Ownership

94.9% of Mativ shares are held by institutional investors. Comparatively, 61.1% of NewMarket shares are held by institutional investors. 1.0% of Mativ shares are held by company insiders. Comparatively, 19.1% of NewMarket shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Mativ and NewMarket”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mativ	$1.97 billion	0.29	-$48.70 million	($8.35)	-1.26
NewMarket	$2.78 billion	2.66	$462.41 million	$47.33	16.59

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

Risk and Volatility

Mativ has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, NewMarket has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Profitability

This table compares Mativ and NewMarket’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mativ	-23.09%	4.12%	1.16%
NewMarket	17.28%	32.25%	15.10%

Dividends

Mativ pays an annual dividend of $0.40 per share and has a dividend yield of 3.8%. NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.5%. Mativ pays out -4.8% of its earnings in the form of a dividend. NewMarket pays out 25.4% 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. Mativ has raised its dividend for 1 consecutive years and NewMarket has raised its dividend for 7 consecutive years. Mativ is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Mativ and NewMarket, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mativ	1	1	1	0	2.00
NewMarket	0	0	1	0	3.00

Mativ presently has a consensus target price of $10.00, suggesting a potential downside of 5.23%. Given Mativ’s higher possible upside, analysts plainly believe Mativ is more favorable than NewMarket.

Summary

NewMarket beats Mativ on 11 of the 16 factors compared between the two stocks.

About Mativ

Mativ Holdings, Inc., together with its subsidiaries, manufactures and sells specialty materials in the United States, Europe, the Asia Pacific, the Americas, and internationally. The company operates through two segments, Advanced Technical Materials and Fiber-Based Solutions. The Advanced Technical Materials manufactures and sells various engineered polymer, resin and fiber-based substrates, nets, films, adhesive tapes, and other nonwovens for the filtration, protective solutions, release liners, and healthcare end-markets. This segment sells its products directly, as well as through sales agents and distributors. The Fiber-Based Solutions segment produces packaging and specialty paper products. This segment provides premium packaging products that are used for wine, spirits and beer labels, folding cartons, box wrap, bags, hang tags, and stored value cards servicing retail, cosmetics, spirits, and electronics end-use markets; and premium papers, which are used in commercial printing services, advertising collateral, stationery, corporate identity packages and brochures, direct mail, business cards, and other uses. It also offers branded paper-based products for the consumer channel, such as bright papers, cardstock, stationery paper, envelopes, journals, and planners. This segment distributes its products through authorized paper distributors, converters, retailers, and specialty business converters, as well as directly to end-users. The company was formerly known as Schweitzer-Mauduit International, Inc. and changed its name to Mativ Holdings, Inc. in July 2022. Mativ Holdings, Inc. was incorporated in 1995 and is headquartered in Alpharetta, Georgia.

About NewMarket

NewMarket Corporation, through its subsidiaries, primarily engages in the manufacture and sale of petroleum additives. The company offers lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized; engine oil additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and engines in ocean-going vessels; driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids; and industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. It also provides fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers. In addition, the company engages in the marketing of antiknock compounds, as well as contracted manufacturing and services activities; and owns and manages a real property in Virginia. It operates in North America, Latin America, Asia Pacific, Europe, the Middle East, Africa, and India. NewMarket Corporation was founded in 1887 and is headquartered in Richmond, Virginia.