Financial Comparison: Olin (NYSE:OLN) and Stepan (NYSE:SCL)

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

Dividends

Olin pays an annual dividend of $0.80 per share and has a dividend yield of 3.4%. Stepan pays an annual dividend of $1.54 per share and has a dividend yield of 3.1%. Olin pays out -666.7% of its earnings in the form of a dividend. Stepan pays out 60.6% 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. Stepan has raised its dividend for 57 consecutive years. Olin is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Olin and Stepan”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Olin	$6.54 billion	0.41	$108.60 million	($0.12)	-197.23
Stepan	$2.18 billion	0.52	$50.37 million	$2.54	19.75

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

Profitability

This table compares Olin and Stepan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Olin	-0.21%	-0.13%	-0.04%
Stepan	2.57%	4.78%	2.42%

Volatility and Risk

Olin has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500. Comparatively, Stepan has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Institutional & Insider Ownership

88.7% of Olin shares are held by institutional investors. Comparatively, 82.7% of Stepan shares are held by institutional investors. 1.6% of Olin shares are held by company insiders. Comparatively, 6.9% of Stepan shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Olin and Stepan, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Olin	1	10	3	0	2.14
Stepan	1	0	0	0	1.00

Olin presently has a consensus price target of $25.57, indicating a potential upside of 8.04%. Given Olin’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Olin is more favorable than Stepan.

Summary

Olin beats Stepan on 9 of the 17 factors compared between the two stocks.

About Olin

Olin Corporation manufactures and distributes chemical products in the United States, Europe, Asia Pacific, Latin America, and Canada. It operates through three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester. The Chlor Alkali Products and Vinyls segment offers chlorine and caustic soda, ethylene dichloride and vinyl chloride monomers, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products, potassium hydroxide, and chlorinated organics intermediates and solvents. The Epoxy segment provides Allylics, such as allyl chloride, epichlorohydrin, and glycerin; aromatics, including acetone, bisphenol, cumene, and phenol; liquid and solid epoxy resins; and converted epoxy resins and additives. The Winchester segment offers sporting ammunition products, including shotshells, small caliber centerfire, and rimfire ammunition products for hunters and recreational shooters, and law enforcement agencies; small caliber military ammunition products for use in infantry and mounted weapons; and industrial products comprising gauge loads and powder-actuated tool loads for maintenance applications in power and concrete industries, and powder-actuated tools in construction industry. The company markets its products through its sales force, as well as directly to various industrial customers, mass merchants, retailers, wholesalers, gun clubs, other distributors, and the U.S. Government and its prime contractors. Olin Corporation was incorporated in 1892 and is based in Clayton, Missouri.

About Stepan

Stepan Company, together with its subsidiaries, produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products worldwide. It operates through three segments: Surfactants, Polymers, and Specialty Products. The Surfactants segment offers surfactants that are used in consumer and industrial cleaning and disinfection products, including detergents for washing clothes, dishes, carpets, and floors and walls, as well as shampoos and body washes; and other applications, such as fabric softeners, germicidal quaternary compounds, disinfectants, and lubricating ingredients. Its surfactants are also used in various applications, including emulsifiers for spreading agricultural products; and industrial applications comprising latex systems, plastics, and composites. The Polymers segment provides polyurethane polyols that are used in the manufacture of rigid foam for thermal insulation in the construction industry, as well as a base raw material for coatings, adhesives, sealants, and elastomers (CASE); polyester resins, including liquid and powdered products, which are used in CASE applications; and phthalic anhydride that is used in unsaturated polyester resins, alkyd resins, and plasticizers for applications in construction materials, as well as components of automotive, boating, and other consumer products. The Specialty Products segment offers flavors, emulsifiers, and solubilizers for use in food, flavoring, nutritional supplement, and pharmaceutical applications. Stepan Company was founded in 1932 and is headquartered in Northbrook, Illinois.