Analyzing Air Products and Chemicals (NYSE:APD) & Innospec (NASDAQ:IOSP)

Air Products and Chemicals (NYSE:APD) and Innospec (NASDAQ:IOSP) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Profitability

This table compares Air Products and Chemicals and Innospec’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Air Products and Chemicals	-2.73%	15.77%	6.75%
Innospec	6.56%	10.18%	7.34%

Analyst Recommendations

This is a breakdown of current recommendations for Air Products and Chemicals and Innospec, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Air Products and Chemicals	0	6	10	0	2.63
Innospec	1	1	0	0	1.50

Air Products and Chemicals presently has a consensus price target of $300.88, suggesting a potential upside of 2.89%. Given Air Products and Chemicals’ stronger consensus rating and higher probable upside, analysts plainly believe Air Products and Chemicals is more favorable than Innospec.

Risk & Volatility

Air Products and Chemicals has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Innospec has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500.

Earnings and Valuation

This table compares Air Products and Chemicals and Innospec”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air Products and Chemicals	$12.21 billion	5.33	-$394.50 million	($1.51)	-193.66
Innospec	$1.78 billion	1.02	$116.60 million	$4.68	15.57

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

Dividends

Air Products and Chemicals pays an annual dividend of $7.24 per share and has a dividend yield of 2.5%. Innospec pays an annual dividend of $1.74 per share and has a dividend yield of 2.4%. Air Products and Chemicals pays out -479.5% of its earnings in the form of a dividend. Innospec pays out 37.2% 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. Air Products and Chemicals has increased its dividend for 43 consecutive years and Innospec has increased its dividend for 11 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

81.7% of Air Products and Chemicals shares are held by institutional investors. Comparatively, 96.6% of Innospec shares are held by institutional investors. 1.9% of Air Products and Chemicals shares are held by company insiders. Comparatively, 1.3% of Innospec shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Air Products and Chemicals beats Innospec on 10 of the 17 factors compared between the two stocks.

About Air Products and Chemicals

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.

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.