Contrasting RPM International (NYSE:RPM) and Toray Industries (OTCMKTS:TRYIY)

RPM International (NYSE:RPM) and Toray Industries (OTCMKTS:TRYIY) are both large-cap basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, dividends and profitability.

Risk and Volatility

RPM International has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, Toray Industries has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.

Insider and Institutional Ownership

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

Analyst Ratings

This is a summary of recent recommendations for RPM International and Toray Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RPM International	0	5	10	0	2.67
Toray Industries	0	2	0	0	2.00

RPM International currently has a consensus price target of $126.75, indicating a potential upside of 13.58%. Given RPM International’s stronger consensus rating and higher probable upside, equities analysts plainly believe RPM International is more favorable than Toray Industries.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RPM International	$7.37 billion	1.94	$688.69 million	$5.19	21.50
Toray Industries	$16.83 billion	0.63	$514.21 million	$0.52	27.27

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

Dividends

RPM International pays an annual dividend of $2.16 per share and has a dividend yield of 1.9%. Toray Industries pays an annual dividend of $0.15 per share and has a dividend yield of 1.1%. RPM International pays out 41.6% of its earnings in the form of a dividend. Toray Industries pays out 28.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. RPM International has raised 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.

Profitability

This table compares RPM International and Toray Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RPM International	8.79%	22.49%	8.75%
Toray Industries	2.38%	3.26%	1.78%

Summary

RPM International beats Toray Industries on 14 of the 17 factors compared between the two stocks.

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.

About Toray Industries

Toray Industries, Inc., together with its subsidiaries, manufactures, processes, and sells fibers and textiles, performance chemicals, carbon fiber composite materials, environment and engineering products, and life science products in Japan, China, North America, Europe, and internationally. The company offers filament yarns, staple fibers, and spun yarns, as well as woven and knitted fabrics of nylon, polyester, acrylics, and others; non-woven fabrics; ultra-fine fibers; and apparel products. It also provides nylon, ABS, PBT, PPS, and other resins and molded products; polyolefin foam products; polyester, polyethylene, polypropylene, and other films; processed film products; raw materials for synthetic fibers and other plastics; fine chemicals; electronic and information materials; and graphic materials. In addition, the company offers carbon fibers, carbon fiber composite materials, and molded products; analysis, physical evaluation, research, and other services; and pharmaceuticals, medical devices, etc. Further, it provides engineering services; condominiums; industrial equipment and machinery; IT-related equipment; water treatment membranes and related equipment; and materials for housing, building, and civil engineering applications. The company was formerly known as Toyo Rayon Co., Ltd. and changed its name to Toray Industries, Inc. in 1970. The company was incorporated in 1926 and is headquartered in Tokyo, Japan.