AdvanSix (NYSE: ASIX) and KMG Chemicals (NYSE:KMG) are both small-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Institutional & Insider Ownership

71.9% of AdvanSix shares are owned by institutional investors. Comparatively, 55.8% of KMG Chemicals shares are owned by institutional investors. 2.7% of AdvanSix shares are owned by insiders. Comparatively, 6.1% of KMG Chemicals shares are owned by 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.

Profitability

This table compares AdvanSix and KMG Chemicals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AdvanSix 3.64% 20.30% 5.64%
KMG Chemicals 6.46% 15.41% 6.24%

Earnings and Valuation

This table compares AdvanSix and KMG Chemicals’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AdvanSix $1.19 billion 0.95 $34.14 million $1.59 23.30
KMG Chemicals $333.44 million 2.63 $23.63 million $1.91 29.86

AdvanSix has higher revenue and earnings than KMG Chemicals. AdvanSix is trading at a lower price-to-earnings ratio than KMG Chemicals, indicating that it is currently the more affordable of the two stocks.

Dividends

KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. AdvanSix does not pay a dividend. KMG Chemicals pays out 6.3% of its earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of recent ratings and price targets for AdvanSix and KMG Chemicals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AdvanSix 0 0 1 0 3.00
KMG Chemicals 0 1 2 0 2.67

AdvanSix presently has a consensus price target of $46.00, suggesting a potential upside of 24.19%. KMG Chemicals has a consensus price target of $71.50, suggesting a potential upside of 25.35%. Given KMG Chemicals’ higher possible upside, analysts clearly believe KMG Chemicals is more favorable than AdvanSix.

Summary

KMG Chemicals beats AdvanSix on 9 of the 15 factors compared between the two stocks.

About AdvanSix

AdvanSix Inc. is an integrated manufacturer of Nylon 6. The Company also sells a variety of other products, all of which are produced as part of the Nylon 6 resin manufacturing process primarily, including caprolactam, ammonium sulfate fertilizers and other chemical intermediates. The Company operates primarily through its integrated manufacturing sites located in Frankford, Pennsylvania, Hopewell, Virginia, and Chesterfield, Virginia. The Company offers ammonium sulfate, which is used by customers as a nitrogen-based fertilizer. It produces ammonium sulfate fertilizer as part of its manufacturing process. The Company manufactures ammonium sulfate fertilizers including Sulf-N and Sulf-N 26. The Company provides AdvanSix Aegis nylon resins and Aegis barrier nylon resins. Its nylon resins are a preferred choice in food, liquid, and consumer packaging along with mono/multifilament products, carpet fibers, automotive compounding and more. It offers Capran biaxially oriented nylon films.

About KMG Chemicals

KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.

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