Contrasting AdvanSix (NYSE:ASIX) and NewMarket (NYSE:NEU)

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

Analyst Recommendations

This is a summary of current ratings for NewMarket and AdvanSix, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewMarket	0	0	1	0	3.00
AdvanSix	1	0	1	0	2.00

AdvanSix has a consensus price target of $33.50, suggesting a potential upside of 94.32%. Given AdvanSix’s higher probable upside, analysts clearly believe AdvanSix is more favorable than NewMarket.

Risk & Volatility

NewMarket has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, AdvanSix has a beta of 1.71, suggesting that its share price is 71% more volatile than the S&P 500.

Dividends

NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.7%. AdvanSix pays an annual dividend of $0.64 per share and has a dividend yield of 3.7%. NewMarket pays out 25.4% of its earnings in the form of a dividend. AdvanSix pays out 33.3% 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. NewMarket has raised its dividend for 7 consecutive years and AdvanSix has raised its dividend for 2 consecutive years.

Insider & Institutional Ownership

61.1% of NewMarket shares are owned by institutional investors. Comparatively, 86.4% of AdvanSix shares are owned by institutional investors. 19.1% of NewMarket shares are owned by insiders. Comparatively, 5.6% of AdvanSix 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.

Earnings & Valuation

This table compares NewMarket and AdvanSix”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewMarket	$2.79 billion	2.32	$462.41 million	$47.33	14.53
AdvanSix	$1.52 billion	0.31	$44.15 million	$1.92	8.98

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NewMarket	16.33%	28.53%	14.02%
AdvanSix	3.52%	7.14%	3.50%

Summary

NewMarket beats AdvanSix on 12 of the 16 factors compared between the two stocks.

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.

About AdvanSix

AdvanSix Inc. engages in the manufacture and sale of polymer resins in the United States and internationally. It offers Nylon 6, a polymer resin, which is a synthetic material used to produce fibers, filaments, engineered plastics, and films. The company also provides caprolactam to manufacture polymer resins; ammonium sulfate fertilizers to distributors, farm cooperatives, and retailers; and acetone that are used in the production of adhesives, paints, coatings, solvents, herbicides, and engineered plastic resins, as well as other intermediate chemicals, including phenol, monoisopropylamine, dipropylamine, monoallylamine, alpha-methylstyrene, cyclohexanone, methyl ethyl ketoxime, acetaldehyde oxime, 2-pentanone oxime, cyclohexanol, sulfuric acid, ammonia, and carbon dioxide. It offers its products under the Aegis, Capran, Sulf-N, Nadone, Naxol, and EZ-Blox brands. The company sells its products directly, as well as through distributors. AdvanSix Inc. was incorporated in 2016 and is headquartered in Parsippany, New Jersey.