Critical Contrast: Avient (NYSE:AVNT) versus Innospec (NASDAQ:IOSP)

Avient (NYSE:AVNT) and Innospec (NASDAQ:IOSP) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Risk & Volatility

Avient has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, Innospec has a beta of 1.06, indicating that its stock price is 6% more volatile than the S&P 500.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avient	$3.25 billion	0.86	$169.50 million	$1.23	24.87
Innospec	$1.79 billion	1.04	$35.60 million	($0.03)	-2,491.33

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

Profitability

This table compares Avient and Innospec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avient	3.65%	10.57%	4.17%
Innospec	1.08%	10.89%	7.70%

Insider & Institutional Ownership

95.5% of Avient shares are held by institutional investors. Comparatively, 96.6% of Innospec shares are held by institutional investors. 0.9% of Avient shares are held by company insiders. Comparatively, 1.3% of Innospec shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for Avient and Innospec, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avient	1	4	4	1	2.50
Innospec	2	0	0	1	2.00

Avient presently has a consensus price target of $42.50, suggesting a potential upside of 38.93%. Given Avient’s stronger consensus rating and higher probable upside, analysts plainly believe Avient is more favorable than Innospec.

Dividends

Avient pays an annual dividend of $1.10 per share and has a dividend yield of 3.6%. Innospec pays an annual dividend of $1.74 per share and has a dividend yield of 2.3%. Avient pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Innospec pays out -5,800.0% of its earnings in the form of a dividend. Avient has increased its dividend for 1 consecutive years and Innospec has increased its dividend for 11 consecutive years.

Summary

Avient beats Innospec on 9 of the 17 factors compared between the two stocks.

About Avient

Avient Corporation operates as a formulator of material solutions in the United States, Canada, Mexico, Europe, South America, and Asia. It operates in two segments, Color, Additives and Inks; and Specialty Engineered Materials. The Color, Additives and Inks segment offers custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets, and specialty inks; custom-formulated liquid system, such as polyester, vinyl, natural rubber and latex, polyurethane, and silicone; and proprietary inks. Its products are used in medical and pharmaceutical devices, food packaging, personal care and cosmetics, transportation, building products, wire and cable, recreational and athletic apparel, construction and filtration, outdoor furniture, healthcare, textiles and appliances, and industrial markets. The Specialty Engineered Materials segment provides specialty polymer formulations, services, and solutions for designers, assemblers, and processors of thermoplastic materials. It sells its products through direct sales personnel, distributors, and commissioned sales agents. The company was formerly known as PolyOne Corporation and changed its name to Avient Corporation in June 2020. Avient Corporation was founded in 1885 and is headquartered in Avon Lake, Ohio.

About Innospec

Innospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally. The company's Fuel Specialties segment offers a range of specialty chemical products that are used as additives in additives in diesel, jet, marine, fuel oil and other fuels. This segment's products are used in the operation of commercial trucking, marine and aviation engines, power station generators, heating oil, and other industrial machinery applications. Its Performance Chemicals segment provides technology-based solutions for its customers' processes or products that focuses on the personal care, home care, agrochemical, construction, mining, and other industrial markets. The company's Oilfield Services segment develops and markets chemical solutions for drilling, completion, fracturing, stimulation, and completion operations; and products for oil and gas production. It sells its products primarily to oil and gas exploration and production companies, oil refineries, fuel manufacturers and users, personal care and home care companies, formulators of agrochemical, and other chemical and industrial companies. The company was formerly known as Octel Corp. and changed its name to Innospec Inc. in January 2006. Innospec Inc. was founded in 1938 and is headquartered in Englewood, Colorado.