Reviewing PPG Industries (NYSE:PPG) and NewMarket (NYSE:NEU)

NewMarket (NYSE:NEU) and PPG Industries (NYSE:PPG) are both basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Dividends

NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.9%. PPG Industries pays an annual dividend of $2.84 per share and has a dividend yield of 2.7%. NewMarket pays out 27.0% of its earnings in the form of a dividend. PPG Industries pays out 40.9% 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. NewMarket has increased its dividend for 7 consecutive years and PPG Industries has increased its dividend for 54 consecutive years. PPG Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for NewMarket and PPG Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewMarket	0	1	0	0	2.00
PPG Industries	0	10	7	1	2.50

PPG Industries has a consensus price target of $124.07, indicating a potential upside of 19.90%. Given PPG Industries’ stronger consensus rating and higher probable upside, analysts clearly believe PPG Industries is more favorable than NewMarket.

Institutional and Insider Ownership

61.1% of NewMarket shares are held by institutional investors. Comparatively, 81.9% of PPG Industries shares are held by institutional investors. 8.6% of NewMarket shares are held by company insiders. Comparatively, 0.3% of PPG Industries shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

NewMarket has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, PPG Industries has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Profitability

This table compares NewMarket and PPG Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NewMarket	15.37%	25.38%	12.73%
PPG Industries	9.93%	22.30%	7.87%

Valuation & Earnings

This table compares NewMarket and PPG Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewMarket	$2.73 billion	2.14	$418.75 million	$44.42	14.00
PPG Industries	$15.88 billion	1.46	$1.58 billion	$6.94	14.91

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

Summary

PPG Industries beats NewMarket on 11 of the 18 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 PPG Industries

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. It operates through two segments, Performance Coatings and Industrial Coatings. The Performance Coatings segment offers coatings, solvents, adhesives, sealants, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors; and coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, kitchenware, and transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers' licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes. PPG Industries, Inc. was incorporated in 1883 and is headquartered in Pittsburgh, Pennsylvania.