Tredegar (NYSE:TG) and Westlake (NYSE:WLK) Financial Contrast

Westlake (NYSE:WLK) and Tredegar (NYSE:TG) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Valuation & Earnings

This table compares Westlake and Tredegar”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westlake	$12.14 billion	0.86	$602.00 million	$2.98	27.22
Tredegar	$618.79 million	0.52	-$64.57 million	($1.68)	-5.54

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

Dividends

Westlake pays an annual dividend of $2.10 per share and has a dividend yield of 2.6%. Tredegar pays an annual dividend of $0.52 per share and has a dividend yield of 5.6%. Westlake pays out 70.5% of its earnings in the form of a dividend. Tredegar pays out -31.0% 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. Westlake has increased its dividend for 21 consecutive years. Tredegar is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Westlake and Tredegar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westlake	3.23%	4.19%	2.21%
Tredegar	-8.35%	9.28%	3.95%

Insider and Institutional Ownership

28.4% of Westlake shares are held by institutional investors. Comparatively, 79.2% of Tredegar shares are held by institutional investors. 1.3% of Westlake shares are held by insiders. Comparatively, 6.0% of Tredegar shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Westlake has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Tredegar has a beta of 0.83, suggesting that its share price is 17% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Westlake and Tredegar, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westlake	0	6	7	0	2.54
Tredegar	0	0	0	0	0.00

Westlake currently has a consensus target price of $90.85, indicating a potential upside of 12.00%. Given Westlake’s stronger consensus rating and higher probable upside, research analysts plainly believe Westlake is more favorable than Tredegar.

Summary

Westlake beats Tredegar on 11 of the 17 factors compared between the two stocks.

About Westlake

Westlake Corporation engages in the manufacture and marketing of performance and essential materials, and housing and infrastructure products in the United States, Canada, Germany, China, Mexico, Brazil, France, Italy, Taiwan, and internationally. The company operates through two segments: Performance and Essential Materials and Housing and Infrastructure Products. The Performance and Essential Materials segment offers ethylene, polyethylene, styrene, chlorinated derivative products, ethylene dichloride, vinyl chloride monomer, polyvinyl chloride (PVC), epoxy specialty resins, and base epoxy resins and intermediaries, as well as chlor-alkali, such as chlorine and caustic soda. The Housing and Infrastructure Products segment provides residential PVC sidings; PVC trim and mouldings; architectural stone veneers; windows; PVC decking; PVC films for various inflatables, wallcovering, and tape and roofing applications; polymer composite and cement roof tiles; PVC pipes and fittings for various water, sewer, electrical, and industrial applications; PVC compounds used in various housing, medical, and automobile products; and consumer and commercial products, such as landscape edging; industrial, home, and office matting; marine dock edging; and masonry joint controls. It offers its products to chemical processors, plastics fabricators, small construction contractors, municipalities, and supply warehouses for use in various consumer and industrial markets, including residential construction, flexible and rigid packaging, automotive products, healthcare products, water treatment, wind turbines, and coatings, as well as other durable and non-durable goods. The company was formerly known as Westlake Chemical Corporation and changed its name to Westlake Corporation in February 2022. Westlake Corporation was founded in 1986 and is headquartered in Houston, Texas. Westlake Corporation operates as a subsidiary of TTWF LP.

About Tredegar

Tredegar Corporation manufactures and sells aluminum extrusions, polyethylene (PE) films, and plastic and polyester films in the United States and internationally. It operates through three segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films. The Aluminum Extrusions segment produces soft and medium strength alloyed aluminum extrusions, custom fabricated and finished aluminum extrusions for the building and construction, automotive and transportation, consumer durables, machinery and equipment, electrical and renewable energy, and distribution markets; and manufactures mill, anodized, and painted and alloyed aluminum extrusions to fabricators and distributors. The PE Films segment offers single- and multi-layer surface protection films for protecting components of flat panel and flexible displays that are used in televisions, monitors, notebooks, smart phones, tablets, e-readers, and digital signage under the UltraMask, ForceField, ForceField PEARL, Pearl A, and Obsidian brands. This segment provides polyethylene overwrap for bathroom tissue and paper towels, as well as polyethylene overwrap films and films for other markets. The Flexible Packaging Films segment offers polyester-based films for food packaging and industrial applications under the Ecophane and Sealphane brands. Tredegar Corporation was incorporated in 1988 and is headquartered in Richmond, Virginia.