Contrasting Kronos Worldwide (NYSE:KRO) and Eastman Chemical (NYSE:EMN)

Eastman Chemical (NYSE:EMN) and Kronos Worldwide (NYSE:KRO) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Volatility and Risk

Eastman Chemical has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Kronos Worldwide has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Insider & Institutional Ownership

83.7% of Eastman Chemical shares are owned by institutional investors. Comparatively, 15.1% of Kronos Worldwide shares are owned by institutional investors. 2.4% of Eastman Chemical shares are owned by insiders. Comparatively, 0.1% of Kronos Worldwide shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Eastman Chemical and Kronos Worldwide”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eastman Chemical	$8.75 billion	0.91	$474.00 million	$4.09	16.99
Kronos Worldwide	$1.89 billion	0.33	$86.20 million	($0.36)	-15.06

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Eastman Chemical and Kronos Worldwide, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eastman Chemical	0	9	7	0	2.44
Kronos Worldwide	3	1	0	0	1.25

Eastman Chemical presently has a consensus target price of $79.21, suggesting a potential upside of 13.99%. Kronos Worldwide has a consensus target price of $6.00, suggesting a potential upside of 10.68%. Given Eastman Chemical’s stronger consensus rating and higher probable upside, analysts plainly believe Eastman Chemical is more favorable than Kronos Worldwide.

Profitability

This table compares Eastman Chemical and Kronos Worldwide’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eastman Chemical	5.42%	10.57%	4.18%
Kronos Worldwide	-2.22%	-3.09%	-1.33%

Dividends

Eastman Chemical pays an annual dividend of $3.36 per share and has a dividend yield of 4.8%. Kronos Worldwide pays an annual dividend of $0.20 per share and has a dividend yield of 3.7%. Eastman Chemical pays out 82.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kronos Worldwide pays out -55.6% of its earnings in the form of a dividend. Eastman Chemical has increased its dividend for 15 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Eastman Chemical beats Kronos Worldwide on 16 of the 17 factors compared between the two stocks.

About Eastman Chemical

Eastman Chemical Company operates as a specialty materials company in the United States, China, and internationally. The company's Additives & Functional Products segment offers amine derivative-based building blocks, intermediates for surfactants, metam-based soil fumigants, and organic acid-based solutions; specialty coalescent and solvents, paint additives, and specialty polymers; and heat transfer and aviation fluids. It serves transportation, personal care, wellness, food, feed, agriculture, building and construction, water treatment, energy, consumables, durables, and electronics markets. Its Advanced Materials segment provides copolyesters, cellulosic biopolymers, cellulose esters, polyvinyl butyral sheets, and window and protective films for value-added end uses in the transportation, durables, electronics, building and construction, medical and pharma, and consumables markets. The company's Chemical Intermediates segment offers olefin and acetyl derivatives, ethylene, and commodity solvents; and primary non-phthalate and phthalate plasticizers, and niche non-phthalate plasticizers for industrial chemicals and processing, building and construction, health and wellness, and food and feed. Its Fibers segment provides cellulose acetate tow, triacetin, cellulose acetate flake, acetic acid, and acetic anhydride for use in filtration media primarily cigarette filters; natural and solution dyed acetate yarns, and staple fiber for use in consumables, and health and wellness markets; and wet-laid nonwoven media, specialty and engineered papers, and cellulose acetate fibers for transportation, industrial, agriculture and mining, and aerospace markets. The company was founded in 1920 and is headquartered in Kingsport, Tennessee.

About Kronos Worldwide

Kronos Worldwide, Inc. produces and markets titanium dioxide pigments (TiO2) in Europe, North America, the Asia Pacific, and internationally. The company produces TiO2 in two crystalline forms, rutile and anatase to impart whiteness, brightness, opacity, and durability for various products, including paints, coatings, plastics, paper, fibers, and ceramics, as well as for various specialty products, such as inks, foods, and cosmetics. It also produces ilmenite, a raw material used directly as a feedstock by sulfate-process TiO2 plants; iron-based chemicals, which are used as treatment and conditioning agents for industrial effluents and municipal wastewater, as well as in the manufacture of iron pigments, cement, and agricultural products; specialty chemicals for use in the formulation of pearlescent pigments, and production of electroceramic capacitors for cell phones and other electronic devices, as well as for use in natural gas pipe, and other specialty applications. In addition, the company provides technical services for its products. It sells its products under the KRONOS brand through agents and distributors to paint, plastics, decorative laminate, and paper manufacturers. The company was founded in 1916 and is headquartered in Dallas, Texas. Kronos Worldwide, Inc. is a subsidiary of Valhi, Inc.