Head-To-Head Analysis: Sumitomo Chemcl (OTCMKTS:SOMMY) versus Methanex (NASDAQ:MEOH)

Sumitomo Chemcl (OTCMKTS:SOMMY) and Methanex (NASDAQ:MEOH) are both mid-cap basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, risk, profitability, analyst recommendations, valuation, earnings and dividends.

Insider and Institutional Ownership

73.5% of Methanex shares are held by institutional investors. 1.0% of Methanex shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Sumitomo Chemcl and Methanex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sumitomo Chemcl	4.01%	8.40%	2.82%
Methanex	2.21%	5.35%	2.03%

Dividends

Sumitomo Chemcl pays an annual dividend of $0.26 per share and has a dividend yield of 1.6%. Methanex pays an annual dividend of $0.74 per share and has a dividend yield of 1.2%. Sumitomo Chemcl pays out 13.3% of its earnings in the form of a dividend. Methanex pays out 65.5% 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. Methanex has raised its dividend for 4 consecutive years. Sumitomo Chemcl is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Sumitomo Chemcl has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500. Comparatively, Methanex has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Earnings and Valuation

This table compares Sumitomo Chemcl and Methanex”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumitomo Chemcl	$17.12 billion	0.31	$254.70 million	$1.96	8.13
Methanex	$3.59 billion	1.29	$79.88 million	$1.13	52.77

Sumitomo Chemcl has higher revenue and earnings than Methanex. Sumitomo Chemcl is trading at a lower price-to-earnings ratio than Methanex, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for Sumitomo Chemcl and Methanex, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumitomo Chemcl	0	1	0	0	2.00
Methanex	0	5	6	1	2.67

Methanex has a consensus target price of $59.20, suggesting a potential downside of 0.72%. Given Methanex’s stronger consensus rating and higher possible upside, analysts plainly believe Methanex is more favorable than Sumitomo Chemcl.

Summary

Methanex beats Sumitomo Chemcl on 10 of the 18 factors compared between the two stocks.

About Sumitomo Chemcl

Sumitomo Chemical Company, Limited engages in Chemicals & Plastics, energy and functional materials, IT-related chemicals, health and crop sciences, pharmaceuticals, and other businesses worldwide. Its Essential Chemicals & Plastics segment offers synthetic resins, such as polyethylene, polypropylene, and polymethyl methacrylate resins; raw materials for synthetic fibers; and various industrial chemicals. The company's Energy & Functional Materials segment provides alumina and aluminum products used for energy products; resorcinol for tires, wood adhesives, flame retardants, and ultraviolet ray absorbants; polymer additives and rubber chemicals; synthetic rubber for tires, shoes, construction materials, and other applications; and engineering plastics and lithium-ion secondary battery materials for use in electronic components and next-generation vehicles. Its IT-Related Chemicals segment provides polarizing films, touch screen sensor panels, and color resists and polymer OLED for LC and OLED displays; photoresists and high-purity chemicals for the semiconductor manufacturing process; and compound semiconductor materials for antenna switches and other components of communication terminal equipment. The company's Health & Crop Sciences segment offers crop protection chemicals, fertilizers, feed additives, and household insecticides; active pharmaceutical ingredients and intermediates; and products to control infectious diseases. Its Pharmaceuticals segment provides prescription and diagnostic pharmaceuticals. The company's Others segment supplies electric power and steam; designs, constructs, and supervises chemical plants; provides transportation and warehousing services; and conducts physical property and environmental analysis. Sumitomo Chemical Company, Limited was founded in 1913 and is headquartered in Tokyo, Japan.

About Methanex

Methanex Corporation produces and supplies methanol in China, Europe, the United States, South America, South Korea, Canada, and Asia. The company also purchases methanol produced by others under methanol offtake contracts and on the spot market. In addition, it owns and leases storage and terminal facilities. The company owns and manages a fleet of approximately 30 ocean-going vessels. It serves chemical and petrochemical producers. Methanex Corporation was incorporated in 1968 and is headquartered in Vancouver, Canada.