Financial Review: Linde (NASDAQ:LIN) & NewMarket (NYSE:NEU)

Linde (NASDAQ:LIN) and NewMarket (NYSE:NEU) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Profitability

This table compares Linde and NewMarket’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Linde	20.20%	19.09%	9.19%
NewMarket	17.28%	32.25%	15.10%

Risk and Volatility

Linde has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500. Comparatively, NewMarket has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Linde and NewMarket, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Linde	0	2	6	2	3.00
NewMarket	0	0	1	0	3.00

Linde presently has a consensus price target of $514.83, suggesting a potential upside of 23.18%. Given Linde’s higher probable upside, research analysts clearly believe Linde is more favorable than NewMarket.

Insider & Institutional Ownership

82.8% of Linde shares are owned by institutional investors. Comparatively, 61.1% of NewMarket shares are owned by institutional investors. 0.7% of Linde shares are owned by insiders. Comparatively, 19.1% of NewMarket shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Linde pays an annual dividend of $6.00 per share and has a dividend yield of 1.4%. NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.6%. Linde pays out 40.2% of its earnings in the form of a dividend. NewMarket pays out 25.4% 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. Linde has increased its dividend for 5 consecutive years and NewMarket has increased its dividend for 7 consecutive years. NewMarket is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Linde and NewMarket”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Linde	$33.25 billion	5.89	$6.57 billion	$14.93	27.99
NewMarket	$2.78 billion	2.60	$462.41 million	$47.33	16.27

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

Summary

Linde beats NewMarket on 10 of the 17 factors compared between the two stocks.

About Linde

Linde plc operates as an industrial gas company in the Americas, Europe, the Middle East, Africa, Asia, and South Pacific. It offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The company also designs and constructs turnkey process plants for third-party customers, as well as for the gas businesses in various locations, such as air separation, hydrogen, synthesis, olefin, and natural gas plants. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company was founded in 1879 and is based in Woking, the United Kingdom.

About NewMarket

NewMarket Corporation, through its subsidiaries, primarily engages in the manufacture and sale of petroleum additives. The company offers lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized; engine oil additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and engines in ocean-going vessels; driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids; and industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. It also provides fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers. In addition, the company engages in the marketing of antiknock compounds, as well as contracted manufacturing and services activities; and owns and manages a real property in Virginia. It operates in North America, Latin America, Asia Pacific, Europe, the Middle East, Africa, and India. NewMarket Corporation was founded in 1887 and is headquartered in Richmond, Virginia.