Critical Analysis: Methanex (NASDAQ:MEOH) vs. Innospec (NASDAQ:IOSP)

Innospec (NASDAQ:IOSP) and Methanex (NASDAQ:MEOH) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, earnings, analyst recommendations and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Innospec	-0.07%	10.28%	7.35%
Methanex	5.97%	9.07%	3.41%

Valuation & Earnings

This table compares Innospec and Methanex”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Innospec	$1.85 billion	1.10	$35.60 million	($0.03)	-2,724.00
Methanex	$3.72 billion	0.99	$163.99 million	$2.95	16.18

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

Institutional & Insider Ownership

96.6% of Innospec shares are owned by institutional investors. Comparatively, 73.5% of Methanex shares are owned by institutional investors. 1.3% of Innospec shares are owned by insiders. Comparatively, 1.0% of Methanex shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Innospec	1	1	0	0	1.50
Methanex	0	4	8	1	2.77

Methanex has a consensus price target of $47.00, suggesting a potential downside of 1.51%. Given Methanex’s stronger consensus rating and higher possible upside, analysts clearly believe Methanex is more favorable than Innospec.

Risk and Volatility

Innospec has a beta of 0.91, suggesting that its stock price is 9% less volatile than the S&P 500. Comparatively, Methanex has a beta of 0.73, suggesting that its stock price is 27% less volatile than the S&P 500.

Dividends

Innospec pays an annual dividend of $1.74 per share and has a dividend yield of 2.1%. Methanex pays an annual dividend of $0.74 per share and has a dividend yield of 1.6%. Innospec pays out -5,800.0% of its earnings in the form of a dividend. Methanex pays out 25.1% 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. Innospec has increased its dividend for 11 consecutive years and Methanex has increased its dividend for 4 consecutive years. Innospec is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

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.

About Methanex

Methanex Corporation produces and supplies methanol in China, Europe, the United States, South America, South Korea, Canada, and Asia. The company also purchases methanol produced by others under methanol offtake contracts and on the spot market. In addition, it owns and leases storage and terminal facilities. The company owns and manages a fleet of approximately 30 ocean-going vessels. It serves chemical and petrochemical producers. Methanex Corporation was incorporated in 1968 and is headquartered in Vancouver, Canada.