Stepan (NYSE:SCL) and Northern Technologies International (NASDAQ:NTIC) Head-To-Head Contrast

Stepan (NYSE:SCL) and Northern Technologies International (NASDAQ:NTIC) are both small-cap basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, institutional ownership, dividends, analyst recommendations, risk and earnings.

Earnings and Valuation

This table compares Stepan and Northern Technologies International”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stepan	$2.18 billion	0.48	$50.37 million	$2.54	18.18
Northern Technologies International	$85.06 million	0.87	$5.41 million	$0.30	26.03

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

Dividends

Stepan pays an annual dividend of $1.54 per share and has a dividend yield of 3.3%. Northern Technologies International pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. Stepan pays out 60.6% of its earnings in the form of a dividend. Northern Technologies International pays out 13.3% 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. Stepan is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Stepan and Northern Technologies International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stepan	0	2	0	0	2.00
Northern Technologies International	1	0	0	0	1.00

Risk & Volatility

Stepan has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Northern Technologies International has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500.

Institutional and Insider Ownership

82.7% of Stepan shares are owned by institutional investors. Comparatively, 32.9% of Northern Technologies International shares are owned by institutional investors. 6.9% of Stepan shares are owned by insiders. Comparatively, 24.3% of Northern Technologies International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Stepan and Northern Technologies International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stepan	2.57%	4.78%	2.42%
Northern Technologies International	3.46%	3.38%	2.66%

Summary

Stepan beats Northern Technologies International on 9 of the 15 factors compared between the two stocks.

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.

About Northern Technologies International

Northern Technologies International Corporation develops and markets rust and corrosion inhibiting solutions in North America, South America, Europe, Asia, the Middle East and internationally. It offers rust and corrosion inhibiting products, such as plastic and paper packaging, liquids, coatings, rust removers, cleaners, diffusers, and engineered solutions designed for the oil and gas industry under the ZERUST brand. The company provides a portfolio of bio-based and certified compostable polymer resin compounds and finished products under the Natur-Tec brand. In addition, it offers on-site and technical consulting for rust and corrosion prevention issues. It sells its products and services to automotive, electronics, electrical, mechanical, military, retail consumer, and oil and gas markets through direct sales force, network of independent distributors, agents, manufacturer's sales representatives, and strategic partners. The company was founded in 1970 and is headquartered in Circle Pines, Minnesota.