Critical Survey: 5E Advanced Materials (NASDAQ:FEAM) and NewMarket (NYSE:NEU)

NewMarket (NYSE:NEU) and 5E Advanced Materials (NASDAQ:FEAM) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, dividends, valuation and risk.

Earnings and Valuation

This table compares NewMarket and 5E Advanced Materials”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewMarket	$2.73 billion	2.36	$418.75 million	$43.78	16.00
5E Advanced Materials	N/A	N/A	-$31.56 million	($2.67)	-0.70

NewMarket has higher revenue and earnings than 5E Advanced Materials. 5E Advanced Materials is trading at a lower price-to-earnings ratio than NewMarket, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for NewMarket and 5E Advanced Materials, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewMarket	0	1	0	0	2.00
5E Advanced Materials	1	1	2	0	2.25

5E Advanced Materials has a consensus target price of $6.25, suggesting a potential upside of 232.45%. Given 5E Advanced Materials’ stronger consensus rating and higher possible upside, analysts clearly believe 5E Advanced Materials is more favorable than NewMarket.

Insider & Institutional Ownership

61.1% of NewMarket shares are owned by institutional investors. 8.6% of NewMarket shares are owned by company insiders. Comparatively, 0.2% of 5E Advanced Materials shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares NewMarket and 5E Advanced Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NewMarket	15.25%	24.12%	12.24%
5E Advanced Materials	N/A	-70.04%	-62.90%

Risk and Volatility

NewMarket has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, 5E Advanced Materials has a beta of 1.84, indicating that its stock price is 84% more volatile than the S&P 500.

Summary

NewMarket beats 5E Advanced Materials on 9 of the 13 factors compared between the two stocks.

About NewMarket

NewMarket Corporation, through its subsidiaries, primarily engages in the manufacture and sale of petroleum additives. The company offers lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized; engine oil additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and engines in ocean-going vessels; driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids; and industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. It also provides fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers. In addition, the company engages in the marketing of antiknock compounds, as well as contracted manufacturing and services activities; and owns and manages a real property in Virginia. It operates in North America, Latin America, Asia Pacific, Europe, the Middle East, Africa, and India. NewMarket Corporation was founded in 1887 and is headquartered in Richmond, Virginia.

About 5E Advanced Materials

5E Advanced Materials, Inc. engages in the exploration and development of mineral properties in Australia and the United States. The company primarily explores for borates and lithium deposits. It holds 100% interest in the Fort Cady project located in the Mojave Desert region in eastern San Bernardino County, California. The company was formerly known as American Pacific Borates Limited. The company was incorporated in 2016 and is based in Hesperia, California.