Sensient Technologies (NYSE: SXT) and Renewable Energy Group (NASDAQ:REGI) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, analyst recommendations, institutional ownership and risk.

Dividends

Sensient Technologies pays an annual dividend of $1.32 per share and has a dividend yield of 1.8%. Renewable Energy Group does not pay a dividend. Sensient Technologies pays out 38.6% of its earnings in the form of a dividend. Sensient Technologies has increased its dividend for 6 consecutive years.

Profitability

This table compares Sensient Technologies and Renewable Energy Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sensient Technologies 8.32% 17.67% 8.77%
Renewable Energy Group 6.01% 29.06% 15.69%

Institutional and Insider Ownership

93.4% of Sensient Technologies shares are owned by institutional investors. 0.9% of Sensient Technologies shares are owned by company insiders. Comparatively, 2.0% of Renewable Energy Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Sensient Technologies and Renewable Energy Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sensient Technologies $1.36 billion 2.23 $89.60 million $3.42 20.94
Renewable Energy Group $2.16 billion 0.30 -$79.07 million ($2.04) -8.48

Sensient Technologies has higher earnings, but lower revenue than Renewable Energy Group. Renewable Energy Group is trading at a lower price-to-earnings ratio than Sensient Technologies, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Sensient Technologies has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Renewable Energy Group has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Sensient Technologies and Renewable Energy Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sensient Technologies 1 0 3 0 2.50
Renewable Energy Group 0 1 2 0 2.67

Sensient Technologies currently has a consensus target price of $90.77, suggesting a potential upside of 26.77%. Renewable Energy Group has a consensus target price of $18.00, suggesting a potential upside of 4.05%. Given Sensient Technologies’ higher possible upside, equities research analysts plainly believe Sensient Technologies is more favorable than Renewable Energy Group.

Summary

Sensient Technologies beats Renewable Energy Group on 10 of the 17 factors compared between the two stocks.

About Sensient Technologies

Sensient Technologies Corporation develops, manufactures, and supplies colors, flavors, and fragrances in the United States and internationally. It operates through three segments: Flavors & Fragrances Group, Color Group, and Asia Pacific Group. The company offers flavor-delivery systems, and compounded and blended products; ingredient products, such as essential oils, natural and synthetic flavors, natural extracts, and aroma chemicals; fragrance products; and chili powder, paprika, and chili pepper, as well as dehydrated vegetables comprising parsley, celery, and spinach to the food, beverage, personal care, and household-products industries. It also provides natural and synthetic color systems for use in foods, beverages, pharmaceuticals, and nutraceuticals; colors and other ingredients for cosmetics, such as active ingredients, solubilizers, and surface treated pigments; pharmaceutical and nutraceutical excipients, including colors, flavors, and coatings; specialty inks; and technical colors for industrial applications under the Sensient Food Colors, Sensient Pharmaceutical Coating Systems, Sensient Cosmetic Technologies, Sensient Inks, and Sensient Industrial Colors trade names. The company was founded in 1882 and is headquartered in Milwaukee, Wisconsin.

About Renewable Energy Group

Renewable Energy Group, Inc. produces and sells biofuels and renewable chemicals in North America. The company operates through Biomass-Based Diesel, Services, Renewable Chemicals, and Corporate and Other segments. It acquires feedstock; and manages construction and operates biomass-based diesel production facilities. The company also produces biomass-based diesel from a range of feedstocks, including inedible corn oil, used cooking oil, and inedible animal fat, as well as soybean or canola oil; and markets, distributes, and sells biomass-based diesel and its co-products. In addition, it is involved in the purchase and resale of biomass-based diesel, petroleum-based diesel, renewable identification numbers, California Low Carbon Fuel Standard credits, and raw material feedstocks acquired from third parties; and sale of glycerin, free fatty acids, naphtha, and other co-products of the biomass-based diesel production process. Further, the company provides facility management and operational services to biomass-based diesel production facilities, as well as to other clean-tech companies; and construction management services for biomass-based diesel production facilities. Additionally, it engages in the production of renewable chemicals, advanced biofuels, and other products; and trading of petroleum-based heating oil and diesel fuel. Renewable Energy Group, Inc. was founded in 1996 and is headquartered in Ames, Iowa.

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