Tronox (NYSE:TROX) versus LyondellBasell Industries (NYSE:LYB) Financial Review

Tronox (NYSE:TROX) and LyondellBasell Industries (NYSE:LYB) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Risk & Volatility

Tronox has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500. Comparatively, LyondellBasell Industries has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500.

Profitability

This table compares Tronox and LyondellBasell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tronox	-15.82%	-19.93%	-4.86%
LyondellBasell Industries	-2.68%	5.68%	1.77%

Dividends

Tronox pays an annual dividend of $0.20 per share and has a dividend yield of 2.5%. LyondellBasell Industries pays an annual dividend of $2.76 per share and has a dividend yield of 4.2%. Tronox pays out -6.8% of its earnings in the form of a dividend. LyondellBasell Industries pays out -110.8% 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. LyondellBasell Industries has increased its dividend for 14 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

73.4% of Tronox shares are owned by institutional investors. Comparatively, 71.2% of LyondellBasell Industries shares are owned by institutional investors. 2.0% of Tronox shares are owned by insiders. Comparatively, 0.1% of LyondellBasell Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Tronox and LyondellBasell Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tronox	4	5	2	0	1.82
LyondellBasell Industries	3	8	8	2	2.43

Tronox presently has a consensus target price of $6.63, suggesting a potential downside of 16.38%. LyondellBasell Industries has a consensus target price of $77.24, suggesting a potential upside of 16.17%. Given LyondellBasell Industries’ stronger consensus rating and higher probable upside, analysts clearly believe LyondellBasell Industries is more favorable than Tronox.

Earnings & Valuation

This table compares Tronox and LyondellBasell Industries”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tronox	$2.90 billion	0.44	-$470.00 million	($2.92)	-2.71
LyondellBasell Industries	$30.15 billion	0.71	-$738.00 million	($2.49)	-26.70

Tronox has higher earnings, but lower revenue than LyondellBasell Industries. LyondellBasell Industries is trading at a lower price-to-earnings ratio than Tronox, indicating that it is currently the more affordable of the two stocks.

Summary

LyondellBasell Industries beats Tronox on 13 of the 18 factors compared between the two stocks.

About Tronox

Tronox Holdings plc operates as a vertically integrated manufacturer of TiO2 pigment in North America, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates titanium-bearing mineral sand mines; and engages in beneficiation and smelting operations. It offers TiO2 pigment; ultrafine specialty TiO2; zircon; feedstock; pig iron; monazite; titanium tetrachloride; and other products. The company’s products are used for the manufacture of paints, coatings, plastics, and paper, as well as various other applications. Tronox Holdings plc is based in Stamford, Connecticut.

About LyondellBasell Industries

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and PolyolefinsAmericas; Olefins and PolyolefinsEurope, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyethylene, and polypropylene; and propylene oxide and derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol. In addition, the company produce and markets compounding and solutions including polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers including catalloy and polybutene-1; and refines heavy, high-sulfur crude oil and other crude oils, as well as refined products, including gasoline and distillates. Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications. LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.