American Vanguard (AVD) versus Sensient Technologies (SXT) Critical Survey

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

Dividends

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American Vanguard pays an annual dividend of $0.08 per share and has a dividend yield of 0.4%. Sensient Technologies pays an annual dividend of $1.32 per share and has a dividend yield of 1.9%. American Vanguard pays out 14.0% of its earnings in the form of a dividend. Sensient Technologies pays out 38.6% 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. Sensient Technologies has increased its dividend for 6 consecutive years. Sensient Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares American Vanguard and Sensient Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Vanguard 5.70% 5.74% 3.66%
Sensient Technologies 6.58% 17.37% 8.84%

Insider & Institutional Ownership

76.8% of American Vanguard shares are owned by institutional investors. Comparatively, 91.0% of Sensient Technologies shares are owned by institutional investors. 4.7% of American Vanguard shares are owned by insiders. Comparatively, 0.9% of Sensient Technologies shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares American Vanguard and Sensient Technologies’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Vanguard $355.05 million 1.74 $20.27 million $0.57 36.40
Sensient Technologies $1.36 billion 2.20 $89.60 million $3.42 20.28

Sensient Technologies has higher revenue and earnings than American Vanguard. Sensient Technologies is trading at a lower price-to-earnings ratio than American Vanguard, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

American Vanguard has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500. Comparatively, Sensient Technologies has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and recommmendations for American Vanguard and Sensient Technologies, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Vanguard 0 1 1 0 2.50
Sensient Technologies 1 0 3 0 2.50

American Vanguard presently has a consensus target price of $25.50, suggesting a potential upside of 22.89%. Sensient Technologies has a consensus target price of $90.77, suggesting a potential upside of 30.84%. Given Sensient Technologies’ higher probable upside, analysts plainly believe Sensient Technologies is more favorable than American Vanguard.

Summary

Sensient Technologies beats American Vanguard on 12 of the 16 factors compared between the two stocks.

American Vanguard Company Profile

American Vanguard Corporation operates as a holding company. The Company conducts its business through its subsidiaries, AMVAC Chemical Corporation (AMVAC), GemChem, Inc. (GemChem), 2110 Davie Corporation (DAVIE), Quimica Amvac de Mexico S.A. de C.V. (AMVAC M), AMVAC Mexico Sociedad de Responsabilidad Limitada (AMVAC M Srl), AMVAC de Costa Rica Sociedad de Responsabilidad Limitada (AMVAC CR Srl), AMVAC Switzerland GmbH (AMVAC S), AMVAC do Brasil Representacoes Ltda (AMVAC B), AMVAC C.V. (AMVAC CV), AMVAC Netherlands BV (AMVAC BV), Envance Technologies, LLC (Envance), AMVAC Singapore Pte, Ltd (AMVAC Sgpr) and Huifeng AMVAC Innovation Co. Limited (Hong Kong JV). AMVAC is a specialty chemical manufacturer that develops and markets products for agricultural, commercial and consumer uses. It manufactures and formulates chemicals, such as insecticides, fungicides, herbicides, molluscicides and soil fumigants for crops, turf and ornamental plants, and human and animal health protection.

Sensient Technologies Company Profile

Sensient Technologies Corporation is a manufacturer and marketer of colors, flavors and fragrances. The Company uses technologies at facilities around the world to develop specialty food and beverage systems, cosmetic and pharmaceutical systems, specialty inks and colors, and other specialty and fine chemicals. The Company’s three segments include the Flavors & Fragrances Group and the Color Group, which are managed on a product-and-services basis, and the Asia Pacific Group, which is managed on a geographic basis. The Company’s principal products include flavors, flavor enhancers and bionutrients; fragrances, aroma chemicals and essential oils; natural ingredients, including dehydrated vegetables and other food ingredients; natural and synthetic food and beverage colors; cosmetic colors and ingredients and pharmaceutical excipients and ingredients, and technical colors, specialty inks and colors, and specialty dyes and pigments.

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