Analyzing Toray Industries (OTCMKTS:TRYIY) and NewMarket (NYSE:NEU)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NewMarket	16.33%	28.53%	14.02%
Toray Industries	2.38%	3.26%	1.78%

Volatility & Risk

NewMarket has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500. Comparatively, Toray Industries has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for NewMarket and Toray Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewMarket	0	0	1	0	3.00
Toray Industries	0	2	0	0	2.00

Institutional & Insider Ownership

61.1% of NewMarket shares are held by institutional investors. 19.1% of NewMarket shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.7%. Toray Industries pays an annual dividend of $0.15 per share and has a dividend yield of 1.1%. NewMarket pays out 25.4% 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. NewMarket has raised its dividend for 7 consecutive years. NewMarket is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares NewMarket and Toray Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewMarket	$2.79 billion	2.40	$462.41 million	$47.33	15.05
Toray Industries	$16.83 billion	0.59	$514.21 million	$0.52	25.32

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

Summary

NewMarket beats Toray Industries on 13 of the 16 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 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.