Critical Review: Quaker Houghton (NYSE:KWR) vs. RPM International (NYSE:RPM)

Quaker Houghton (NYSE:KWR) and RPM International (NYSE:RPM) are both basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Dividends

Quaker Houghton pays an annual dividend of $2.03 per share and has a dividend yield of 1.4%. RPM International pays an annual dividend of $2.16 per share and has a dividend yield of 2.1%. Quaker Houghton pays out 725.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RPM International pays out 41.6% of its earnings in the form of a dividend. Quaker Houghton has increased its dividend for 17 consecutive years and RPM International has increased its dividend for 51 consecutive years. RPM International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

77.5% of Quaker Houghton shares are owned by institutional investors. Comparatively, 81.0% of RPM International shares are owned by institutional investors. 1.0% of Quaker Houghton shares are owned by company insiders. Comparatively, 1.6% of RPM International shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Quaker Houghton has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, RPM International has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Profitability

This table compares Quaker Houghton and RPM International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quaker Houghton	0.22%	9.03%	4.39%
RPM International	8.63%	22.55%	8.75%

Valuation and Earnings

This table compares Quaker Houghton and RPM International”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quaker Houghton	$1.89 billion	1.36	-$2.49 million	$0.28	526.77
RPM International	$7.37 billion	1.74	$688.69 million	$5.19	19.42

RPM International has higher revenue and earnings than Quaker Houghton. RPM International is trading at a lower price-to-earnings ratio than Quaker Houghton, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Quaker Houghton and RPM International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaker Houghton	2	0	3	0	2.20
RPM International	0	5	10	0	2.67

Quaker Houghton currently has a consensus target price of $166.00, suggesting a potential upside of 12.55%. RPM International has a consensus target price of $126.33, suggesting a potential upside of 25.34%. Given RPM International’s stronger consensus rating and higher probable upside, analysts clearly believe RPM International is more favorable than Quaker Houghton.

Summary

RPM International beats Quaker Houghton on 15 of the 17 factors compared between the two stocks.

About Quaker Houghton

Quaker Chemical Corporation, together with its subsidiaries, develops, produces, and markets various formulated specialty chemical products for a range of heavy industrial and manufacturing applications in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die-cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, specialty greases, offshore sub-sea energy control fluids, rolling lubricants, rod and wire drawing fluids, and surface treatment chemicals. The company also provides chemical management services. It serves steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. The company was founded in 1918 and is headquartered in Conshohocken, Pennsylvania.

About RPM International

RPM International Inc. manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. It offers waterproofing, coating, and traditional roofing systems; sealants, air barriers, tapes, and foams; residential home weatherization systems; roofing and building maintenance services; sealing and bonding, subfloor preparation, flooring, and glazing solutions; resin flooring systems, polyurethane, MMA waterproof, epoxy floor paint and coatings, concrete repair, and protection products; fire stopping and intumescent steel coating, and manufacturing industry solutions; rolled asphalt roofing materials and chemical admixtures; concrete and masonry admixtures, concrete fibers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, injection resins, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and restoration materials; insulated building cladding materials; and concrete form wall systems. It also provides polymer flooring systems; fiberglass reinforced plastic gratings and shapes; corrosion-control coating, containment and railcar lining, fire and sound proofing, and heat and cryogenic insulation products; specialty construction products; amine curing agents, reactive diluents, and epoxy resins; fluorescent colorants and pigments; shellac-based-specialty and marine coatings; fire and water damage restoration, carpet cleaning, and disinfecting products; fuel additives; wood treatments, coatings, and touch-up products; and nail enamels, polishes, and coating components. In addition, it offers solutions for the paint contractors and DIYers, concrete restoration and flooring, metallic and faux finish coatings, cleaners, and hobby paints and cements; and caulks, adhesives, insulating foams, and patches, as well as spackling, glazing, and repair products. The company was incorporated in 1947 and is headquartered in Medina, Ohio.