Westlake Chemical Partners (WLKP) and NewMarket Corporation (NEU) Critical Survey
Westlake Chemical Partners (NYSE: WLKP) and NewMarket Corporation (NYSE:NEU) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, profitabiliy, valuation, analyst recommendations, earnings, risk and dividends.
This table compares Westlake Chemical Partners and NewMarket Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Westlake Chemical Partners||3.60%||4.34%||2.54%|
Risk & Volatility
Westlake Chemical Partners has a beta of 1.24, suggesting that its stock price is 24% more volatile than the S&P 500. Comparatively, NewMarket Corporation has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.
This is a summary of current ratings and target prices for Westlake Chemical Partners and NewMarket Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Westlake Chemical Partners||0||0||2||0||3.00|
Westlake Chemical Partners presently has a consensus target price of $26.50, suggesting a potential upside of 7.94%. Given Westlake Chemical Partners’ stronger consensus rating and higher probable upside, equities analysts clearly believe Westlake Chemical Partners is more favorable than NewMarket Corporation.
Westlake Chemical Partners pays an annual dividend of $1.42 per share and has a dividend yield of 5.8%. NewMarket Corporation pays an annual dividend of $7.00 per share and has a dividend yield of 1.6%. Westlake Chemical Partners pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NewMarket Corporation pays out 34.0% of its earnings in the form of a dividend. Westlake Chemical Partners has increased its dividend for 8 consecutive years and NewMarket Corporation has increased its dividend for 2 consecutive years. Westlake Chemical Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
79.0% of Westlake Chemical Partners shares are held by institutional investors. Comparatively, 56.6% of NewMarket Corporation shares are held by institutional investors. 16.8% of NewMarket Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Westlake Chemical Partners and NewMarket Corporation’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Westlake Chemical Partners||$1.01 billion||0.66||$439.46 million||$1.42||17.29|
|NewMarket Corporation||$2.11 billion||2.41||$402.53 million||$20.57||20.82|
Westlake Chemical Partners has higher revenue, but lower earnings than NewMarket Corporation. Westlake Chemical Partners is trading at a lower price-to-earnings ratio than NewMarket Corporation, indicating that it is currently the more affordable of the two stocks.
NewMarket Corporation beats Westlake Chemical Partners on 9 of the 17 factors compared between the two stocks.
Westlake Chemical Partners Company Profile
Westlake Chemical Partners LP is a limited partnership formed by Westlake Chemical Corporation (Westlake). The Company operates, acquires and develops ethylene production facilities and other assets. Its business and operations are conducted through Westlake Chemical OpCo LP (OpCo). OpCo sells ethylene to Westlake and others, as well as sells co-products of ethylene production, including propylene, crude butadiene, pyrolysis gasoline and hydrogen. As of December 31, 2016, OpCo’s assets included three ethylene production facilities, which primarily convert ethane into ethylene, and a 200-mile ethylene pipeline. As of December 31, 2016, OpCo owned two ethylene production facilities at Westlake’s Lake Charles, Louisiana site (Petro 1 and Petro 2, collectively Lake Charles Olefins), and one ethylene production facility at Westlake’s Calvert City, Kentucky site (Calvert City Olefins), with an annual capacity of approximately 630 million pounds.
NewMarket Corporation Company Profile
NewMarket Corporation is a holding company. The Company is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company operates through petroleum additives segment, which is primarily represented by Afton. The Company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end user applications. The petroleum additives product applications include lubricant additives and fuel additives. The Company’s All other category includes the operations of the TEL business, as well as contract manufacturing and services performed by Ethyl. The Ethyl plant facility is located in Houston, Texas. It is involved in terminal operations related to TEL and other fuel additives.
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