Analyzing Covestro (COVTY) and The Competition

Covestro (OTCMKTS:COVTY) is one of 297 public companies in the “Chemicals” industry, but how does it compare to its competitors? We will compare Covestro to similar businesses based on the strength of its valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.

Profitability

This table compares Covestro and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Covestro	-6.97%	-13.22%	-6.31%
Covestro Competitors	-102.55%	-11.15%	-1.67%

Analyst Recommendations

This is a summary of current recommendations for Covestro and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Covestro	0	1	0	0	2.00
Covestro Competitors	3200	12172	14182	493	2.40

As a group, “Chemicals” companies have a potential upside of 7.16%. Given Covestro’s competitors stronger consensus rating and higher possible upside, analysts plainly believe Covestro has less favorable growth aspects than its competitors.

Dividends

Covestro pays an annual dividend of $1.31 per share and has a dividend yield of 3.8%. Covestro pays out -51.8% of its earnings in the form of a dividend. As a group, “Chemicals” companies pay a dividend yield of 3.2% and pay out 103.3% of their earnings in the form of a dividend. Covestro is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Volatility and Risk

Covestro has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Covestro’s competitors have a beta of 1.24, suggesting that their average stock price is 24% more volatile than the S&P 500.

Insider & Institutional Ownership

48.2% of shares of all “Chemicals” companies are held by institutional investors. 14.0% of shares of all “Chemicals” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Covestro and its competitors gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Covestro	$14.64 billion	-$728.62 million	-13.66
Covestro Competitors	$6.70 billion	$216.44 million	-3.95

Covestro has higher revenue, but lower earnings than its competitors. Covestro is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Summary

Covestro competitors beat Covestro on 11 of the 15 factors compared.

About Covestro

Covestro AG supplies high-tech polymer materials and application solutions. It operates in two segments, Performance Materials, and Solutions & Specialties. The Performance Materials segment develops, produces, and supplies high-performance materials, such as polyurethanes and polycarbonates, and base chemicals, which include diphenylmethane diisocyanate (MDI), toluylene diisocyanate, long-chain polyols, and polycarbonate resins for use in furniture and wood processing, construction, automotive, and transportation industries, as well as roof structures, insulation for buildings and refrigerators, mattresses, car seats, and other applications. The Solutions & Specialties segment comprises a range of polymer products, including polycarbonates, precursors for coatings and adhesives, MDI specialties and polyols, thermoplastic polyurethanes, specialty films, and elastomers that are used in automotive and transportation, electrical, electronics and household appliances, construction, and healthcare industries, as well as composite resins for solar panel frames, laptops, floodlights, and electric vehicle batteries. The company markets its products through trading houses and distributors. It operates in Europe, the Middle East, Africa, Latin America, the United States, Canada, and the People's Republic of China. The company was founded in 1863 and is headquartered in Leverkusen, Germany.