A. Schulman (NASDAQ: SHLM) and LyondellBasell Industries NV (NYSE:LYB) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Profitability

This table compares A. Schulman and LyondellBasell Industries NV’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
A. Schulman -14.86% 35.64% 3.29%
LyondellBasell Industries NV 11.40% 60.87% 16.41%

Risk & Volatility

A. Schulman has a beta of 1.45, meaning that its share price is 45% more volatile than the S&P 500. Comparatively, LyondellBasell Industries NV has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Insider and Institutional Ownership

84.2% of A. Schulman shares are held by institutional investors. Comparatively, 73.8% of LyondellBasell Industries NV shares are held by institutional investors. 4.1% of A. Schulman shares are held by insiders. Comparatively, 0.1% of LyondellBasell Industries NV shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for A. Schulman and LyondellBasell Industries NV, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
A. Schulman 0 2 2 0 2.50
LyondellBasell Industries NV 1 5 8 0 2.50

A. Schulman presently has a consensus target price of $35.00, suggesting a potential upside of 7.86%. LyondellBasell Industries NV has a consensus target price of $95.92, suggesting a potential downside of 0.13%. Given A. Schulman’s higher probable upside, equities research analysts clearly believe A. Schulman is more favorable than LyondellBasell Industries NV.

Valuation and Earnings

This table compares A. Schulman and LyondellBasell Industries NV’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
A. Schulman $2.42 billion 0.39 $207.01 million ($12.50) -2.60
LyondellBasell Industries NV $31.95 billion 1.19 $6.14 billion $8.96 10.72

LyondellBasell Industries NV has higher revenue and earnings than A. Schulman. A. Schulman is trading at a lower price-to-earnings ratio than LyondellBasell Industries NV, indicating that it is currently the more affordable of the two stocks.

Dividends

A. Schulman pays an annual dividend of $0.82 per share and has a dividend yield of 2.5%. LyondellBasell Industries NV pays an annual dividend of $3.60 per share and has a dividend yield of 3.7%. A. Schulman pays out -6.6% of its earnings in the form of a dividend. LyondellBasell Industries NV pays out 40.2% 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. A. Schulman has raised its dividend for 5 consecutive years.

Summary

LyondellBasell Industries NV beats A. Schulman on 9 of the 16 factors compared between the two stocks.

A. Schulman Company Profile

A. Schulman, Inc. is an international supplier of plastic formulations, resins and services, and provides solutions to its customers’ requirements through custom-formulated products. The Company’s customers span a range of markets, such as packaging, mobility, building and construction, electronics and electrical, agriculture, personal care and hygiene, custom services, and sports, home and leisure. The Company’s segments include Europe, Middle East and Africa (EMEA), the United States and Canada (USCAN), Latin America (LATAM), Asia Pacific (APAC) and Engineered Composites (EC). As of August 31, 2016, the Company operated in six product families, including custom performance colors (CPC), engineered composites, Masterbatch solutions, engineered plastics, specialty powders and distribution services. The CPC product family offers powdered, pelletized and liquid color concentrates that are custom-designed for thermoplastic resins.

LyondellBasell Industries NV Company Profile

LyondellBasell Industries N.V. is a chemical company. The Company operates in five segments: Olefins and Polyolefins-Americas (O&P-Americas), Olefins and Polyolefins-Europe, Asia, International (O&P-EAI), Intermediates and Derivatives (I&D), Refining and Technology. The O&P-Americas segment produces and markets olefins and co-products, polyethylene and polypropylene. The O&P-EAI segment produces and markets olefins and co-products, polyethylene and polypropylene. The I&D segment produces and markets propylene oxide (PO) and its derivatives, oxyfuels and related products, and intermediate chemicals, such as styrene monomer (SM), acetyls and ethylene oxides. The primary product of the Refining segment is refined products made from sulfur crude oil and other crude oils of various types and sources available on the United States Gulf Coast. The Technology segment develops and licenses chemical and polyolefin process technologies and manufactures and sells polyolefin catalysts.

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