Financial Analysis: Cabot (NYSE:CBT) & Brenntag (OTCMKTS:BNTGY)

Cabot (NYSE:CBT) and Brenntag (OTCMKTS:BNTGY) are both mid-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Dividends

Cabot pays an annual dividend of $1.80 per share and has a dividend yield of 2.5%. Brenntag pays an annual dividend of $0.28 per share and has a dividend yield of 2.4%. Cabot pays out 30.0% of its earnings in the form of a dividend. Brenntag pays out 43.8% 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 raised its dividend for 14 consecutive years. Cabot is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Cabot has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, Brenntag has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Cabot and Brenntag, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cabot	2	1	3	0	2.17
Brenntag	3	6	0	0	1.67

Cabot currently has a consensus target price of $74.00, suggesting a potential upside of 3.04%. Brenntag has a consensus target price of $12.80, suggesting a potential upside of 11.89%. Given Brenntag’s higher possible upside, analysts plainly believe Brenntag is more favorable than Cabot.

Institutional and Insider Ownership

93.2% of Cabot shares are held by institutional investors. 3.0% of Cabot 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.

Profitability

This table compares Cabot and Brenntag’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cabot	8.91%	24.55%	10.57%
Brenntag	2.66%	9.14%	3.69%

Earnings and Valuation

This table compares Cabot and Brenntag”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cabot	$3.71 billion	1.02	$331.00 million	$6.01	11.95
Brenntag	$17.57 billion	0.47	$580.22 million	$0.64	17.88

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

Summary

Cabot beats Brenntag on 13 of the 17 factors compared between the two stocks.

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.

About Brenntag

Brenntag SE purchases and supplies various industrial and specialty chemicals, and ingredients in Germany, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates in two segments, Brenntag Essentials and Brenntag Specialties. It provides just-in-time delivery, product mixing, blending, repackaging, inventory management, and drum return handling. The company serves customers in various end-market industries, including nutrition, pharma, personal care, water treatment, and lubricants; and home, industrial, and institutional markets, as well as coatings and constructions, polymers, and rubber industries. The company was founded in 1874 and is based in Essen, Germany.