Financial Contrast: Shin-Etsu Chemical (OTCMKTS:SHECY) versus Arkema (OTCMKTS:ARKAY)

Shin-Etsu Chemical (OTCMKTS:SHECY) and Arkema (OTCMKTS:ARKAY) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Analyst Ratings

This is a summary of current ratings and price targets for Shin-Etsu Chemical and Arkema, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shin-Etsu Chemical	0	1	0	0	2.00
Arkema	3	3	2	0	1.88

Institutional and Insider Ownership

0.0% of Shin-Etsu Chemical shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Shin-Etsu Chemical has a beta of 1.28, meaning that its share price is 28% more volatile than the S&P 500. Comparatively, Arkema has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500.

Earnings and Valuation

This table compares Shin-Etsu Chemical and Arkema”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shin-Etsu Chemical	$16.82 billion	4.88	$3.56 billion	$0.86	24.06
Arkema	$10.26 billion	0.50	$71.28 million	$0.87	77.64

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

Profitability

This table compares Shin-Etsu Chemical and Arkema’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shin-Etsu Chemical	18.96%	10.75%	8.93%
Arkema	0.65%	4.44%	2.31%

Dividends

Shin-Etsu Chemical pays an annual dividend of $0.23 per share and has a dividend yield of 1.1%. Arkema pays an annual dividend of $3.03 per share and has a dividend yield of 4.5%. Shin-Etsu Chemical pays out 26.7% of its earnings in the form of a dividend. Arkema pays out 348.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Shin-Etsu Chemical beats Arkema on 10 of the 14 factors compared between the two stocks.

About Shin-Etsu Chemical

Shin-Etsu Chemical Co., Ltd. provides infrastructure, electronics, and functional materials in Japan. It is also involved in processing and specialized related services. The company operates through Infrastructure Materials; Electronics Materials; Functional Materials; and Processing and Specialized Services segments. In addition, it offers cellulose derivatives, synthetic pheromones, aroma chemicals, dielectric and LED/ semiconductor materials, silanes, photoresists, chlorides, caustic soda, liquid fluoroelastomers, polyvinyl chloride and vinyl acetate resin, silicones, and silicones processed goods. Further, the company offers pellicles, photomask blanks, synthetic quartz/ quartz cloth, pyrolytic boron nitride, LIB anode material, and silicon metal. Additionally, it provides rare earth magnets, compound semiconductors, and oxide single crystals. The company was formerly known as Shin-Etsu Nitrogen Fertilizer Co., Ltd. and changed its name to Shin-Etsu Chemical Co., Ltd. in 1940. Shin-Etsu Chemical Co., Ltd. was incorporated in 1926 and is headquartered in Tokyo, Japan.

About Arkema

Arkema S.A. manufactures and sells specialty chemicals and advanced materials worldwide. The company operates in three segments: Adhesive Solutions, Advanced Materials and Coating Solutions, and Intermediates. The Adhesive Solutions segment provides solutions for construction, renovation of buildings, DIY, durable goods, and packaging and non-woven applications; and supplies technologies used in building activities for businesses and individuals, including sealants, tiles, flooring adhesives and waterproofing systems, and technologies used in industry, which include automotive, textiles, glazing, flexible and rigid packaging, and hygiene markets. This segment also offers performance polymers, such as specialty polyamides, PVDF, polyimides, fluorospecialties, and polyetherketoneketone; and performance additives which includes molecular sieves, organic peroxides, thiochemicals, and hydrogen peroxide. The Advance Materials and Coating Solutions segment offers coating solutions, including comprising EU/US acrylics and coating resins; coating additives, such as sartomer photocure resins and coatex rheology additives. This segment also provides decorative paints, industrial coatings, and adhesives; and solutions for applications in the paper, superabsorbent, water treatment and oil and gas extraction, and 3D printing and electronics industries. The Intermediates segment provides fluorogases and acrylics; and industrial intermediate chemicals used in construction, refrigeration and air conditioning, automotive, coatings, and water treatment sectors. Arkema S.A. was incorporated in 2003 and is headquartered in Colombes, France.