PolyOne Corporation (NYSE: POL) and Dow Chemical (NYSE:DOW) are both mid-cap basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitabiliy, dividends, analyst recommendations, earnings, institutional ownership and risk.

Valuation & Earnings

This table compares PolyOne Corporation and Dow Chemical’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PolyOne Corporation $3.39 billion 0.93 $408.00 million $2.06 18.67
Dow Chemical $50.69 billion 1.59 $8.98 billion $3.93 16.83

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for PolyOne Corporation and Dow Chemical, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PolyOne Corporation 0 2 1 0 2.33
Dow Chemical 0 3 8 0 2.73

PolyOne Corporation currently has a consensus target price of $37.67, suggesting a potential downside of 2.06%. Dow Chemical has a consensus target price of $69.44, suggesting a potential upside of 5.00%. Given Dow Chemical’s stronger consensus rating and higher probable upside, analysts plainly believe Dow Chemical is more favorable than PolyOne Corporation.

Dividends

PolyOne Corporation pays an annual dividend of $0.54 per share and has a dividend yield of 1.4%. Dow Chemical pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. PolyOne Corporation pays out 26.2% of its earnings in the form of a dividend. Dow Chemical pays out 46.8% 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. PolyOne Corporation has raised its dividend for 5 consecutive years and Dow Chemical has raised its dividend for 6 consecutive years. Dow Chemical is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

PolyOne Corporation has a beta of 1.71, meaning that its stock price is 71% more volatile than the S&P 500. Comparatively, Dow Chemical has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Institutional & Insider Ownership

94.3% of PolyOne Corporation shares are owned by institutional investors. Comparatively, 69.0% of Dow Chemical shares are owned by institutional investors. 1.6% of PolyOne Corporation shares are owned by insiders. Comparatively, 0.9% of Dow Chemical shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares PolyOne Corporation and Dow Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PolyOne Corporation 5.10% 24.50% 6.65%
Dow Chemical 6.92% 13.37% 4.58%

Summary

Dow Chemical beats PolyOne Corporation on 10 of the 17 factors compared between the two stocks.

PolyOne Corporation Company Profile

PolyOne Corporation (PolyOne) provides specialized polymer materials, services and solutions. Its segments include Color, Additives and Inks; Specialty Engineered Materials; Designed Structures and Solutions; Performance Products and Solutions, and PolyOne Distribution. The Color, Additives and Inks segment provides custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets. The Specialty Engineered Materials segment provides specialty polymer formulations, services and solutions for designers, assemblers and processors of thermoplastic materials. Its Designed Structures and Solutions segment utilizes a range of polymers, specialty additives and processing technologies. The Performance Products and Solutions segment consists of the Geon Performance Materials and Producer Services business units. As of December 31, 2016, the PolyOne Distribution segment distributed more than 4,000 grades of engineering and commodity grade resins.

Dow Chemical Company Profile

The Dow Chemical Company manufactures and supplies products used primarily as raw materials in the manufacture of customer products and services. The Company’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils; Consumer Solutions, which consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses; Infrastructure Solutions, which consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses; Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses, and Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

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