Head-To-Head Analysis: NL Industries (NYSE:NL) and PPG Industries (NYSE:PPG)

NL Industries (NYSE:NL) and PPG Industries (NYSE:PPG) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, earnings, valuation, institutional ownership and risk.

Analyst Ratings

This is a summary of recent ratings and recommmendations for NL Industries and PPG Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NL Industries	1	0	0	0	1.00
PPG Industries	0	8	6	1	2.53

NL Industries currently has a consensus price target of $6.00, indicating a potential downside of 0.99%. PPG Industries has a consensus price target of $129.82, indicating a potential upside of 19.81%. Given PPG Industries’ stronger consensus rating and higher possible upside, analysts plainly believe PPG Industries is more favorable than NL Industries.

Risk and Volatility

NL Industries has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500. Comparatively, PPG Industries has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500.

Institutional and Insider Ownership

10.7% of NL Industries shares are owned by institutional investors. Comparatively, 81.9% of PPG Industries shares are owned by institutional investors. 0.3% of NL Industries shares are owned by company insiders. Comparatively, 0.3% of PPG Industries shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares NL Industries and PPG Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NL Industries	$145.90 million	2.03	$67.23 million	$1.10	5.51
PPG Industries	$15.85 billion	1.54	$1.12 billion	$4.41	24.57

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

Profitability

This table compares NL Industries and PPG Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NL Industries	35.06%	12.93%	9.69%
PPG Industries	6.25%	23.85%	8.40%

Dividends

NL Industries pays an annual dividend of $0.36 per share and has a dividend yield of 5.9%. PPG Industries pays an annual dividend of $2.84 per share and has a dividend yield of 2.6%. NL Industries pays out 32.7% of its earnings in the form of a dividend. PPG Industries pays out 64.4% 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. NL Industries has raised its dividend for 2 consecutive years and PPG Industries has raised its dividend for 54 consecutive years. NL Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

PPG Industries beats NL Industries on 13 of the 18 factors compared between the two stocks.

About NL Industries

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in Europe, North America, the Asia Pacific, and internationally. The company manufactures and sells mechanical and electronic cabinet locks and other locking mechanisms, including disc tumbler locks; pin tumbler locking mechanisms under KeSet, System 64, TuBar, and Turbine brands; and electronic locks under CompX eLock and StealthLock brands for use in various applications, such as mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. It also offers original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, and other exhaust components; gauges, such as GPS speedometers and tachometers; mechanical and electronic controls and throttles; wake enhancement devices, trim tabs, steering wheels, and other billet aluminum accessories; dash panels, LED indicators, wire harnesses, and other accessories; and grab handles, pin cleats, and other accessories; primarily for performance and ski/wakeboard and performance boats. In addition, the company produces and markets value-added titanium dioxide pigments, a base industrial product used in imparting whiteness, brightness, opacity, and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals, and other industrial and consumer products. The company sells its component products directly to original equipment manufacturers, as well as through distributors. NL Industries, Inc. was founded in 1891 and is based in Dallas, Texas. NL Industries, Inc. operates as a subsidiary of Valhi, Inc.

About PPG Industries

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. It operates through two segments, Performance Coatings and Industrial Coatings. The Performance Coatings segment offers coatings, solvents, adhesives, sealants, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors; and coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, kitchenware, and transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers' licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes. PPG Industries, Inc. was incorporated in 1883 and is headquartered in Pittsburgh, Pennsylvania.