Reviewing Olin (NYSE:OLN) and Shin-Etsu Chemical (OTCMKTS:SHECY)

Shin-Etsu Chemical (OTCMKTS:SHECY) and Olin (NYSE:OLN) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Risk and Volatility

Shin-Etsu Chemical has a beta of 1.37, suggesting that its stock price is 37% more volatile than the S&P 500. Comparatively, Olin has a beta of 1.66, suggesting that its stock price is 66% more volatile than the S&P 500.

Institutional and Insider Ownership

0.0% of Shin-Etsu Chemical shares are held by institutional investors. Comparatively, 88.7% of Olin shares are held by institutional investors. 1.7% of Olin shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Shin-Etsu Chemical and Olin”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shin-Etsu Chemical	$16.82 billion	3.62	$3.56 billion	$0.87	17.64
Olin	$6.54 billion	0.35	$108.60 million	$0.46	43.66

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

Analyst Recommendations

This is a summary of current ratings and price targets for Shin-Etsu Chemical and Olin, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shin-Etsu Chemical	0	1	0	0	2.00
Olin	2	11	2	1	2.13

Olin has a consensus target price of $25.00, indicating a potential upside of 24.47%. Given Olin’s stronger consensus rating and higher probable upside, analysts plainly believe Olin is more favorable than Shin-Etsu Chemical.

Profitability

This table compares Shin-Etsu Chemical and Olin’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shin-Etsu Chemical	19.32%	10.77%	9.06%
Olin	0.79%	3.36%	0.89%

Dividends

Shin-Etsu Chemical pays an annual dividend of $0.23 per share and has a dividend yield of 1.5%. Olin pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. Shin-Etsu Chemical pays out 26.4% of its earnings in the form of a dividend. Olin pays out 173.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Olin beats Shin-Etsu Chemical on 9 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 Olin

Olin Corporation manufactures and distributes chemical products in the United States, Europe, Asia Pacific, Latin America, and Canada. It operates through three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester. The Chlor Alkali Products and Vinyls segment offers chlorine and caustic soda, ethylene dichloride and vinyl chloride monomers, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products, potassium hydroxide, and chlorinated organics intermediates and solvents. The Epoxy segment provides Allylics, such as allyl chloride, epichlorohydrin, and glycerin; aromatics, including acetone, bisphenol, cumene, and phenol; liquid and solid epoxy resins; and converted epoxy resins and additives. The Winchester segment offers sporting ammunition products, including shotshells, small caliber centerfire, and rimfire ammunition products for hunters and recreational shooters, and law enforcement agencies; small caliber military ammunition products for use in infantry and mounted weapons; and industrial products comprising gauge loads and powder-actuated tool loads for maintenance applications in power and concrete industries, and powder-actuated tools in construction industry. The company markets its products through its sales force, as well as directly to various industrial customers, mass merchants, retailers, wholesalers, gun clubs, other distributors, and the U.S. Government and its prime contractors. Olin Corporation was incorporated in 1892 and is based in Clayton, Missouri.