OCI Partners (NYSE: OCIP) and KMG Chemicals (NYSE:KMG) are both small-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.
Valuation and Earnings
This table compares OCI Partners and KMG Chemicals’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|OCI Partners||$343.33 million||2.36||-$50.55 million||($0.06)||-155.00|
|KMG Chemicals||$333.44 million||3.23||$23.63 million||$1.91||36.67|
Risk and Volatility
OCI Partners has a beta of 1.24, indicating that its stock price is 24% more volatile than the S&P 500. Comparatively, KMG Chemicals has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.
OCI Partners pays an annual dividend of $0.32 per share and has a dividend yield of 3.4%. KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. OCI Partners pays out -533.3% of its earnings in the form of a dividend. KMG Chemicals pays out 6.3% 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. OCI Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
14.0% of OCI Partners shares are owned by institutional investors. Comparatively, 81.0% of KMG Chemicals shares are owned by institutional investors. 6.1% of KMG Chemicals shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a summary of current ratings and target prices for OCI Partners and KMG Chemicals, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
OCI Partners currently has a consensus target price of $7.00, suggesting a potential downside of 24.73%. KMG Chemicals has a consensus target price of $71.50, suggesting a potential upside of 2.08%. Given KMG Chemicals’ stronger consensus rating and higher probable upside, analysts plainly believe KMG Chemicals is more favorable than OCI Partners.
This table compares OCI Partners and KMG Chemicals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
KMG Chemicals beats OCI Partners on 10 of the 16 factors compared between the two stocks.
OCI Partners Company Profile
OCI Partners LP owns and operates an integrated methanol and ammonia production facility that is located on the Texas Gulf Coast near Beaumont. The Company has an annual methanol production capacity of approximately 912,500 metric tons and an annual ammonia production capacity of approximately 331,000 metric tons. It purchases natural gas from third parties and processes the natural gas into synthesis gas, which it then further processes in the production of methanol and ammonia. It stores and sells the processed methanol and ammonia to industrial and commercial customers for further processing or distribution. Its methanol production unit comprises Foster-Wheeler-designed twin steam methane reformers for synthesis gas production, over two Lurgi-designed parallel low-pressure, water-cooled reactors and approximately four distillation columns. The Haldor-Topsoe-designed ammonia synthesis loop at its facility processes hydrogen produced by methanol production process.
KMG Chemicals Company Profile
KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.
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