NewMarket (NYSE:NEU) vs. Trinseo (NYSE:TSE) Financial Review

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewMarket	$2.73 billion	2.09	$418.75 million	$44.42	13.63
Trinseo	$3.13 billion	0.00	-$348.50 million	($11.55)	-0.02

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

Dividends

NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 2.0%. Trinseo pays an annual dividend of $0.04 per share and has a dividend yield of 17.4%. NewMarket pays out 27.0% of its earnings in the form of a dividend. Trinseo pays out -0.3% 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 Trinseo has raised its dividend for 1 consecutive years. Trinseo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and target prices for NewMarket and Trinseo, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewMarket	0	0	1	0	3.00
Trinseo	1	2	0	0	1.67

Trinseo has a consensus target price of $1.00, suggesting a potential upside of 334.78%. Given Trinseo’s higher possible upside, analysts clearly believe Trinseo is more favorable than NewMarket.

Volatility & Risk

NewMarket has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, Trinseo has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500.

Insider and Institutional Ownership

61.1% of NewMarket shares are owned by institutional investors. Comparatively, 82.7% of Trinseo shares are owned by institutional investors. 19.1% of NewMarket shares are owned by company insiders. Comparatively, 4.5% of Trinseo shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NewMarket	15.37%	25.38%	12.73%
Trinseo	-13.15%	N/A	-11.72%

Summary

NewMarket beats Trinseo on 11 of the 17 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 Trinseo

Trinseo PLC operates as a specialty material solutions provider in the United States, Europe, the Asia-Pacific, and internationally. It operates through five segments: Engineered Materials, Latex Binders, Plastics Solutions, Polystyrene, and Americas Styrenics. The Engineered Materials segment offers rigid thermoplastic compounds and blends, soft thermoplastic, continuous cast, cell cast, activated methyl methacrylates (MMA), PMMA resins, and extruded PMMA sheets and resins for consumer electronics, medical, footwear, automotive, and building and construction applications under the EMERGE, CALIBRE, PLEXIGLAS, ALTUGLAS, ACRYSPA, AVONITE, STUDIO, MEGOL, APILON, APIGO, and APINAT brands. The Latex Binders segment provides styrene-butadiene latex, and other latex polymers and binders primarily for coated paper and packaging board, carpet, and artificial turf backings, as well as the adhesive, building and construction, and technical textile paper market. The Plastics Solutions segment offers acrylonitrile-butadiene-styrene, styrene-acrylonitrile, polycarbonate, and compounds and blends for automotive and other applications under the MAGNUM brand. The Polystyrene segment provides general purpose polystyrenes and high impact polystyrene for use in appliances, food packaging and food service disposables, consumer electronics, and building and construction materials under the STYRON brand. The Americas Styrenics segment provides styrene and polystyrene for appliances, food packaging, food service disposables, consumer electronics, and building and construction materials applications. Trinseo PLC was incorporated in 2015 and is headquartered in Wayne, Pennsylvania.