Critical Contrast: LyondellBasell Industries (NYSE:LYB) versus Arkema (OTCMKTS:ARKAY)

Arkema (OTCMKTS:ARKAY) and LyondellBasell Industries (NYSE:LYB) are both basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, earnings and analyst recommendations.

Institutional and Insider Ownership

71.2% of LyondellBasell Industries shares are owned by institutional investors. 0.1% of LyondellBasell Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Arkema and LyondellBasell Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arkema	$10.33 billion	0.53	$383.06 million	$2.08	34.28
LyondellBasell Industries	$30.15 billion	0.61	-$738.00 million	($2.33)	-24.34

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Arkema and LyondellBasell Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arkema	3	2	2	0	1.86
LyondellBasell Industries	5	17	1	0	1.83

LyondellBasell Industries has a consensus price target of $51.12, suggesting a potential downside of 9.88%. Given LyondellBasell Industries’ higher possible upside, analysts plainly believe LyondellBasell Industries is more favorable than Arkema.

Profitability

This table compares Arkema and LyondellBasell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arkema	1.55%	5.15%	2.70%
LyondellBasell Industries	-2.46%	4.94%	1.60%

Risk and Volatility

Arkema has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, LyondellBasell Industries has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Dividends

Arkema pays an annual dividend of $3.02 per share and has a dividend yield of 4.2%. LyondellBasell Industries pays an annual dividend of $5.48 per share and has a dividend yield of 9.7%. Arkema pays out 145.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. LyondellBasell Industries pays out -235.2% of its earnings in the form of a dividend. LyondellBasell Industries has raised its dividend for 14 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Arkema beats LyondellBasell Industries on 9 of the 17 factors compared between the two stocks.

About Arkema

Arkema S.A. manufactures and sells specialty chemicals and advanced materials worldwide. The company operates in three segments: Adhesive Solutions, Advanced Materials and Coating Solutions, and Intermediates. The Adhesive Solutions segment provides solutions for construction, renovation of buildings, DIY, durable goods, and packaging and non-woven applications; and supplies technologies used in building activities for businesses and individuals, including sealants, tiles, flooring adhesives and waterproofing systems, and technologies used in industry, which include automotive, textiles, glazing, flexible and rigid packaging, and hygiene markets. This segment also offers performance polymers, such as specialty polyamides, PVDF, polyimides, fluorospecialties, and polyetherketoneketone; and performance additives which includes molecular sieves, organic peroxides, thiochemicals, and hydrogen peroxide. The Advance Materials and Coating Solutions segment offers coating solutions, including comprising EU/US acrylics and coating resins; coating additives, such as sartomer photocure resins and coatex rheology additives. This segment also provides decorative paints, industrial coatings, and adhesives; and solutions for applications in the paper, superabsorbent, water treatment and oil and gas extraction, and 3D printing and electronics industries. The Intermediates segment provides fluorogases and acrylics; and industrial intermediate chemicals used in construction, refrigeration and air conditioning, automotive, coatings, and water treatment sectors. Arkema S.A. was incorporated in 2003 and is headquartered in Colombes, France.

About LyondellBasell Industries

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and PolyolefinsAmericas; Olefins and PolyolefinsEurope, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyethylene, and polypropylene; and propylene oxide and derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol. In addition, the company produce and markets compounding and solutions including polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers including catalloy and polybutene-1; and refines heavy, high-sulfur crude oil and other crude oils, as well as refined products, including gasoline and distillates. Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications. LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.