Critical Survey: Albemarle (NYSE:ALB) and LyondellBasell Industries (NYSE:LYB)

Albemarle (NYSE:ALB) and LyondellBasell Industries (NYSE:LYB) are both large-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Albemarle and LyondellBasell Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Albemarle	2	18	9	1	2.30
LyondellBasell Industries	4	15	2	0	1.90

Albemarle presently has a consensus target price of $120.21, indicating a potential downside of 15.01%. LyondellBasell Industries has a consensus target price of $53.65, indicating a potential upside of 23.95%. Given LyondellBasell Industries’ higher possible upside, analysts clearly believe LyondellBasell Industries is more favorable than Albemarle.

Dividends

Albemarle pays an annual dividend of $1.62 per share and has a dividend yield of 1.1%. LyondellBasell Industries pays an annual dividend of $5.48 per share and has a dividend yield of 12.7%. Albemarle pays out -101.9% of its earnings in the form of a dividend. LyondellBasell Industries pays out -146.1% 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. Albemarle has raised its dividend for 30 consecutive years and LyondellBasell Industries has raised its dividend for 14 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Albemarle and LyondellBasell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Albemarle	-0.43%	0.10%	0.05%
LyondellBasell Industries	-3.70%	7.50%	2.53%

Valuation & Earnings

This table compares Albemarle and LyondellBasell Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Albemarle	$5.38 billion	3.10	-$1.18 billion	($1.59)	-88.95
LyondellBasell Industries	$40.30 billion	0.35	$1.37 billion	($3.75)	-11.54

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

Insider and Institutional Ownership

92.9% of Albemarle shares are owned by institutional investors. Comparatively, 71.2% of LyondellBasell Industries shares are owned by institutional investors. 0.3% of Albemarle shares are owned by company insiders. Comparatively, 0.1% of LyondellBasell Industries shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Albemarle has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, LyondellBasell Industries has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Summary

Albemarle beats LyondellBasell Industries on 10 of the 18 factors compared between the two stocks.

About Albemarle

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services. The Specialties segment provides bromine-based specialty chemicals, including elemental bromine, alkyl and inorganic bromides, brominated powdered activated carbon, and other bromine fine chemicals; lithium specialties, such as butyllithium and lithium aluminum hydride; develops and manufactures cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications that include airbag initiators. The Ketjen segment offers clean fuels technologies (CFT), which is composed of hydroprocessing catalysts (HPC) together with isomerization and akylation catalysts; fluidized catalytic cracking (FCC) catalysts and additives; and performance catalyst solutions (PCS), which is composed of organometallics and curatives. The company serves the energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, and crop protection markets. Albemarle Corporation was founded in 1887 and is headquartered in Charlotte, North Carolina.

About LyondellBasell Industries

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and PolyolefinsAmericas; Olefins and PolyolefinsEurope, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyethylene, and polypropylene; and propylene oxide and derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol. In addition, the company produce and markets compounding and solutions including polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers including catalloy and polybutene-1; and refines heavy, high-sulfur crude oil and other crude oils, as well as refined products, including gasoline and distillates. Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications. LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.