Reviewing Cabot (NYSE:CBT) & Eastman Chemical (NYSE:EMN)

Cabot (NYSE:CBT) and Eastman Chemical (NYSE:EMN) are both mid-cap basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Dividends

Cabot pays an annual dividend of $1.80 per share and has a dividend yield of 2.6%. Eastman Chemical pays an annual dividend of $3.32 per share and has a dividend yield of 5.5%. Cabot pays out 23.5% of its earnings in the form of a dividend. Eastman Chemical pays out 46.6% 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. Cabot has raised its dividend for 14 consecutive years and Eastman Chemical has raised its dividend for 15 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations for Cabot and Eastman Chemical, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cabot	1	2	1	0	2.00
Eastman Chemical	1	5	8	0	2.50

Cabot presently has a consensus target price of $85.00, indicating a potential upside of 24.15%. Eastman Chemical has a consensus target price of $82.62, indicating a potential upside of 36.16%. Given Eastman Chemical’s stronger consensus rating and higher probable upside, analysts plainly believe Eastman Chemical is more favorable than Cabot.

Profitability

This table compares Cabot and Eastman Chemical’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cabot	11.14%	25.68%	10.92%
Eastman Chemical	8.96%	15.24%	5.91%

Volatility & Risk

Cabot has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500.

Valuation & Earnings

This table compares Cabot and Eastman Chemical”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cabot	$3.99 billion	0.91	$380.00 million	$7.65	8.95
Eastman Chemical	$9.29 billion	0.75	$905.00 million	$7.12	8.52

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

Institutional and Insider Ownership

93.2% of Cabot shares are owned by institutional investors. Comparatively, 83.7% of Eastman Chemical shares are owned by institutional investors. 3.0% of Cabot shares are owned by insiders. Comparatively, 1.9% of Eastman Chemical shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Cabot beats Eastman Chemical on 9 of the 17 factors compared between the two stocks.

About Cabot

Cabot Corporation operates as a specialty chemicals and performance materials company. The company operates through two segments, Reinforcement Materials and Performance Chemicals. It offers reinforcing carbons that are used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites solutions. The company also provides specialty carbons for use in inks, coatings, plastics, adhesives, toners, batteries, and displays; conductive additives and fumed alumina used in lead acid and lithium-ion batteries for electric vehicles; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; and fumed alumina for use in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries. In addition, it offers aerogel, a hydrophobic, silica-based particle to use in various thermal insulation and specialty chemical applications; masterbatch and conductive compound products that are used in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; and inkjet colorants for inkjet printing applications. The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.

About Eastman Chemical

Eastman Chemical Company operates as a specialty materials company in the United States, China, and internationally. The company's Additives & Functional Products segment offers amine derivative-based building blocks, intermediates for surfactants, metam-based soil fumigants, and organic acid-based solutions; specialty coalescent and solvents, paint additives, and specialty polymers; and heat transfer and aviation fluids. It serves transportation, personal care, wellness, food, feed, agriculture, building and construction, water treatment, energy, consumables, durables, and electronics markets. Its Advanced Materials segment provides copolyesters, cellulosic biopolymers, cellulose esters, polyvinyl butyral sheets, and window and protective films for value-added end uses in the transportation, durables, electronics, building and construction, medical and pharma, and consumables markets. The company's Chemical Intermediates segment offers olefin and acetyl derivatives, ethylene, and commodity solvents; and primary non-phthalate and phthalate plasticizers, and niche non-phthalate plasticizers for industrial chemicals and processing, building and construction, health and wellness, and food and feed. Its Fibers segment provides cellulose acetate tow, triacetin, cellulose acetate flake, acetic acid, and acetic anhydride for use in filtration media primarily cigarette filters; natural and solution dyed acetate yarns, and staple fiber for use in consumables, and health and wellness markets; and wet-laid nonwoven media, specialty and engineered papers, and cellulose acetate fibers for transportation, industrial, agriculture and mining, and aerospace markets. The company was founded in 1920 and is headquartered in Kingsport, Tennessee.