Analyzing Brenntag (OTCMKTS:BNTGY) and Sensient Technologies (NYSE:SXT)

Sensient Technologies (NYSE:SXT) and Brenntag (OTCMKTS:BNTGY) are both materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Dividends

Sensient Technologies pays an annual dividend of $1.64 per share and has a dividend yield of 1.4%. Brenntag pays an annual dividend of $0.25 per share and has a dividend yield of 1.8%. Sensient Technologies pays out 41.3% of its earnings in the form of a dividend. Brenntag pays out 42.4% 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.

Volatility and Risk

Sensient Technologies has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, Brenntag has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Sensient Technologies and Brenntag, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sensient Technologies	0	2	3	0	2.60
Brenntag	1	6	0	0	1.86

Sensient Technologies presently has a consensus price target of $139.67, suggesting a potential upside of 18.29%. Given Sensient Technologies’ stronger consensus rating and higher probable upside, research analysts clearly believe Sensient Technologies is more favorable than Brenntag.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sensient Technologies	9.27%	13.77%	7.33%
Brenntag	2.41%	8.30%	3.32%

Insider & Institutional Ownership

90.9% of Sensient Technologies shares are held by institutional investors. 1.3% of Sensient Technologies shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Sensient Technologies and Brenntag”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sensient Technologies	$1.75 billion	2.88	$134.49 million	$3.97	29.74
Brenntag	$17.16 billion	0.59	$299.37 million	$0.59	23.94

Brenntag has higher revenue and earnings than Sensient Technologies. Brenntag 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 Brenntag on 13 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 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.