Financial Review: Covestro (OTCMKTS:COVTY) and Westlake (NYSE:WLK)

Westlake (NYSE:WLK) and Covestro (OTCMKTS:COVTY) are both large-cap basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Institutional and Insider Ownership

28.4% of Westlake shares are held by institutional investors. 1.3% of Westlake shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Westlake	-0.57%	1.26%	0.66%
Covestro	-2.68%	-5.68%	-2.70%

Risk and Volatility

Westlake has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Covestro has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Earnings and Valuation

This table compares Westlake and Covestro”s gross revenue, earnings per share 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	27.30
Covestro	$15.34 billion	0.86	-$287.84 million	($1.08)	-32.37

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

Analyst Ratings

This is a breakdown of recent recommendations for Westlake and Covestro, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westlake	0	6	8	0	2.57
Covestro	0	2	0	0	2.00

Westlake currently has a consensus price target of $92.9286, suggesting a potential upside of 14.24%. Given Westlake’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Westlake is more favorable than Covestro.

Summary

Westlake beats Covestro on 10 of the 14 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 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.