Critical Analysis: 5E Advanced Materials (NASDAQ:FEAM) versus Trinseo (NYSE:TSE)

Trinseo (NYSE:TSE) and 5E Advanced Materials (NASDAQ:FEAM) are both small-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Valuation and Earnings

This table compares Trinseo and 5E Advanced Materials”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trinseo	$3.51 billion	0.00	-$348.50 million	($11.55)	-0.04
5E Advanced Materials	N/A	N/A	-$31.56 million	($7.03)	-0.32

5E Advanced Materials has lower revenue, but higher earnings than Trinseo. 5E Advanced Materials is trading at a lower price-to-earnings ratio than Trinseo, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Trinseo and 5E Advanced Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trinseo	-13.15%	N/A	-11.72%
5E Advanced Materials	N/A	-103.10%	-64.96%

Risk & Volatility

Trinseo has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, 5E Advanced Materials has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Trinseo and 5E Advanced Materials, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trinseo	2	1	0	0	1.33
5E Advanced Materials	1	1	2	0	2.25

Trinseo currently has a consensus price target of $1.00, indicating a potential upside of 127.79%. 5E Advanced Materials has a consensus price target of $8.13, indicating a potential upside of 262.72%. Given 5E Advanced Materials’ stronger consensus rating and higher probable upside, analysts plainly believe 5E Advanced Materials is more favorable than Trinseo.

Institutional & Insider Ownership

82.7% of Trinseo shares are owned by institutional investors. 4.5% of Trinseo shares are owned by insiders. Comparatively, 0.2% of 5E Advanced Materials shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

5E Advanced Materials beats Trinseo on 7 of the 13 factors compared between the two stocks.

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.

About 5E Advanced Materials

5E Advanced Materials, Inc. engages in the exploration and development of mineral properties in Australia and the United States. The company primarily explores for borates and lithium deposits. It holds 100% interest in the Fort Cady project located in the Mojave Desert region in eastern San Bernardino County, California. The company was formerly known as American Pacific Borates Limited. The company was incorporated in 2016 and is based in Hesperia, California.