Critical Survey: Westaim (OTCMKTS:WEDXF) & Sensient Technologies (NYSE:SXT)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sensient Technologies	8.34%	12.82%	6.78%
Westaim	-123.33%	-6.91%	-6.03%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sensient Technologies and Westaim, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sensient Technologies	1	2	1	0	2.00
Westaim	0	0	0	0	0.00

Sensient Technologies currently has a consensus price target of $110.00, indicating a potential upside of 32.58%. Given Sensient Technologies’ stronger consensus rating and higher possible upside, analysts clearly believe Sensient Technologies is more favorable than Westaim.

Institutional and Insider Ownership

90.9% of Sensient Technologies shares are held by institutional investors. 1.2% of Sensient Technologies shares are held by company insiders. Comparatively, 4.2% of Westaim shares are held by company 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.

Volatility and Risk

Sensient Technologies has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Westaim has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sensient Technologies and Westaim”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sensient Technologies	$1.61 billion	2.19	$134.49 million	$3.16	26.26
Westaim	$17.04 million	34.83	-$16.18 million	($1.69)	-10.52

Sensient Technologies has higher revenue and earnings than Westaim. Westaim 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 Westaim on 12 of the 14 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 Westaim

The Westaim Corporation is a private equity firm specializing in direct and indirect investments through acquisitions, joint ventures, secondary investments both direct and indirect, fund of fund investments, and other arrangements. For direct investments, the firm invests in early venture, mid venture, late venture, middle market, later stage, mature, emerging growth, PIPEs, and buyout transactions. For fund of fund investments, it seeks to invest in private equity funds, venture capital funds, and hedge funds. The firm seeks to provide long term capital to businesses operating in the global financial services industry. It typically acquires controlling interests in businesses. The firm seeks to acquire debt, equity, or derivative securities of both public and private companies. It invests with the objective of providing its shareholders with capital appreciation and real wealth preservation. The firm seeks to provide its portfolio companies with advisory services including, but not limited to, advice on capital allocation, financing strategy, performance measurement and merger and acquisition support. It also seeks to partner with like-minded providers of third party capital to help supplement the firm's own capital, when completing acquisitions. The firm generally seeks to hold its investments for seven to 15 years. The Westaim Corporation was founded in 1996 and is based in Toronto, Canada.