Albemarle (NYSE:ALB) versus Shin-Etsu Chemical (OTCMKTS:SHECY) Financial Review

Albemarle (NYSE:ALB) and Shin-Etsu Chemical (OTCMKTS:SHECY) are both large-cap basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Albemarle and Shin-Etsu Chemical, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Albemarle	2	13	12	1	2.43
Shin-Etsu Chemical	0	1	0	0	2.00

Albemarle presently has a consensus target price of $177.48, suggesting a potential downside of 5.65%. Given Albemarle’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Albemarle is more favorable than Shin-Etsu Chemical.

Institutional & Insider Ownership

92.9% of Albemarle shares are owned by institutional investors. Comparatively, 0.0% of Shin-Etsu Chemical shares are owned by institutional investors. 0.4% of Albemarle shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

Albemarle has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500. Comparatively, Shin-Etsu Chemical has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Earnings & Valuation

This table compares Albemarle and Shin-Etsu Chemical”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Albemarle	$5.14 billion	4.31	-$510.63 million	($5.75)	-32.71
Shin-Etsu Chemical	$16.82 billion	5.00	$3.56 billion	$0.86	24.66

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Albemarle	-10.74%	0.41%	0.19%
Shin-Etsu Chemical	18.96%	10.75%	8.93%

Dividends

Albemarle pays an annual dividend of $1.62 per share and has a dividend yield of 0.9%. Shin-Etsu Chemical pays an annual dividend of $0.23 per share and has a dividend yield of 1.1%. Albemarle pays out -28.2% of its earnings in the form of a dividend. Shin-Etsu Chemical pays out 26.7% 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. Albemarle has raised its dividend for 30 consecutive years.

About Albemarle

Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services. The Specialties segment provides bromine-based specialty chemicals, including elemental bromine, alkyl and inorganic bromides, brominated powdered activated carbon, and other bromine fine chemicals; lithium specialties, such as butyllithium and lithium aluminum hydride; develops and manufactures cesium products for the chemical and pharmaceutical industries; and zirconium, barium, and titanium products for pyrotechnical applications that include airbag initiators. The Ketjen segment offers clean fuels technologies (CFT), which is composed of hydroprocessing catalysts (HPC) together with isomerization and akylation catalysts; fluidized catalytic cracking (FCC) catalysts and additives; and performance catalyst solutions (PCS), which is composed of organometallics and curatives. The company serves the energy storage, petroleum refining, consumer electronics, construction, automotive, lubricants, pharmaceuticals, and crop protection markets. Albemarle Corporation was founded in 1887 and is headquartered in Charlotte, North Carolina.

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.