Reviewing Trinseo (TSE) & Rayonier Advanced Materials (RYAM)
Rayonier Advanced Materials (NYSE: RYAM) and Trinseo (NYSE:TSE) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.
This table compares Rayonier Advanced Materials and Trinseo’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Rayonier Advanced Materials||5.71%||24.17%||3.63%|
Rayonier Advanced Materials pays an annual dividend of $0.28 per share and has a dividend yield of 2.1%. Trinseo pays an annual dividend of $1.44 per share and has a dividend yield of 2.1%. Rayonier Advanced Materials pays out 35.0% of its earnings in the form of a dividend. Trinseo pays out 20.3% 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. Trinseo is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
Rayonier Advanced Materials has a beta of 4.29, indicating that its stock price is 329% more volatile than the S&P 500. Comparatively, Trinseo has a beta of 2.39, indicating that its stock price is 139% more volatile than the S&P 500.
This is a summary of current recommendations and price targets for Rayonier Advanced Materials and Trinseo, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Rayonier Advanced Materials||0||0||5||0||3.00|
Rayonier Advanced Materials presently has a consensus price target of $18.80, suggesting a potential upside of 38.34%. Trinseo has a consensus price target of $74.25, suggesting a potential upside of 9.19%. Given Rayonier Advanced Materials’ stronger consensus rating and higher possible upside, analysts clearly believe Rayonier Advanced Materials is more favorable than Trinseo.
Institutional and Insider Ownership
93.5% of Rayonier Advanced Materials shares are held by institutional investors. Comparatively, 97.8% of Trinseo shares are held by institutional investors. 2.1% of Rayonier Advanced Materials shares are held by company insiders. Comparatively, 0.7% of Trinseo shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Rayonier Advanced Materials and Trinseo’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Rayonier Advanced Materials||$840.05 million||0.70||$202.73 million||$0.80||16.99|
|Trinseo||$4.10 billion||0.73||$477.25 million||$7.08||9.60|
Trinseo has higher revenue and earnings than Rayonier Advanced Materials. Trinseo is trading at a lower price-to-earnings ratio than Rayonier Advanced Materials, indicating that it is currently the more affordable of the two stocks.
Trinseo beats Rayonier Advanced Materials on 10 of the 16 factors compared between the two stocks.
About Rayonier Advanced Materials
Rayonier Advanced Materials Inc. is engaged in the production of cellulose specialties. The Company’s product lines include cellulose specialties and commodity products. Its products are used in manufacturing processes. The Company’s products are sold throughout the world to companies for use in various industrial applications, and to produce a range of products, including cigarette filters, foods, pharmaceuticals, textiles and electronics. The Company focuses on producing various forms of cellulose specialties products, such as cellulose acetate and cellulose ethers. The Company’s production facilities are located in Jesup, Georgia and Fernandina Beach, Florida. The Jesup plant can produce cellulose specialties or commodity products using both hardwood and softwood in a pre-hydrolyzed kraft or high potential of hydrogen (pH) cooking process. The Fernandina Beach plant can produce cellulose specialties or commodity products using softwood in a sulfite or low pH cooking process.
Trinseo S.A. is a materials company engaged in the manufacture and marketing of synthetic rubber, latex and plastics. The Company’s segments include Latex Binders, Synthetic Rubber, Performance Plastics, Basic Plastics, Feedstocks and Americas Styrenics. The Latex Binders segment produces styrene-butadiene latex (SB latex) and other latex polymers and binders. The Synthetic Rubber segment produces synthetic rubber products used in tires, impact modifiers and technical rubber products. The Performance Plastics segment produces compounds and blends and specialized acrylonitrile-butadiene-styrene (ABS) grades. The Basic Plastics segment produces styrenic polymers, including polystyrene, basic ABS, and styrene-acrylonitrile (SAN) products, as well as polycarbonate (PC). The Feedstocks segment includes its production and procurement of styrene monomer outside of North America. The Americas Styrenics segment consists of the operations of its joint venture, Americas Styrenics LLC.
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