Analyzing Neo Performance Materials (OTCMKTS:NOPMF) and Quaker Houghton (NYSE:KWR)

Quaker Houghton (NYSE:KWR) and Neo Performance Materials (OTCMKTS:NOPMF) are both materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.

Profitability

This table compares Quaker Houghton and Neo Performance Materials’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quaker Houghton	4.80%	9.84%	4.81%
Neo Performance Materials	1.43%	13.10%	7.17%

Dividends

Quaker Houghton pays an annual dividend of $2.12 per share and has a dividend yield of 1.4%. Neo Performance Materials pays an annual dividend of $0.29 per share and has a dividend yield of 1.6%. Quaker Houghton pays out 37.9% of its earnings in the form of a dividend. Neo Performance Materials pays out 193.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Quaker Houghton has increased its dividend for 17 consecutive years.

Valuation & Earnings

This table compares Quaker Houghton and Neo Performance Materials”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quaker Houghton	$1.89 billion	1.40	-$2.49 million	$5.59	27.52
Neo Performance Materials	$478.79 million	1.72	-$9.98 million	$0.15	119.60

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

Institutional and Insider Ownership

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

Analyst Ratings

This is a breakdown of current ratings and target prices for Quaker Houghton and Neo Performance Materials, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaker Houghton	0	2	4	0	2.67
Neo Performance Materials	0	1	2	1	3.00

Quaker Houghton currently has a consensus price target of $186.00, suggesting a potential upside of 20.92%. Given Quaker Houghton’s higher possible upside, equities research analysts clearly believe Quaker Houghton is more favorable than Neo Performance Materials.

Summary

Quaker Houghton beats Neo Performance Materials on 11 of the 17 factors compared between the two stocks.

About Quaker Houghton

Quaker Houghton is a global provider of industrial process fluids and specialty chemicals. Its products include metalworking fluids, industrial lubricants, hydraulic fluids, cleaners, corrosion-prevention products, and coatings used in manufacturing and other industrial operations. The company serves customers across industries such as steel and aluminum production, automotive, aerospace, mining, and general machinery. Its solutions are designed to support processes including metal forming, machining, heat treatment, and equipment operation.

About Neo Performance Materials

Neo Performance Materials is a Canadian advanced materials company that produces specialized materials used in applications including electric motors, consumer electronics, automotive systems, and industrial equipment. Its business focuses on materials derived from rare earths and other specialty metals. The company operates through three main businesses. Magnequench makes magnetic powders and bonded magnets used in compact, high-performance motors and other devices. Chemicals and Oxides produces rare earth materials, including separated oxides and related products, while Rare Metals supplies specialty metals and compounds for industrial and technology applications.