Analyzing Tronox (NYSE:TROX) and Kuraray (OTCMKTS:KURRY)

Kuraray (OTCMKTS:KURRY) and Tronox (NYSE:TROX) are both materials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, valuation, risk, earnings, profitability and institutional ownership.

Dividends

Kuraray pays an annual dividend of $0.85 per share and has a dividend yield of 2.6%. Tronox pays an annual dividend of $0.20 per share and has a dividend yield of 4.8%. Kuraray pays out 160.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tronox pays out -5.8% of its earnings in the form of a dividend. Tronox is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

73.4% of Tronox shares are held by institutional investors. 2.0% of Tronox shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Kuraray and Tronox”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kuraray	$5.41 billion	0.61	$50.04 million	$0.53	62.16
Tronox	$2.90 billion	0.23	-$470.00 million	($3.46)	-1.22

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

Profitability

This table compares Kuraray and Tronox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kuraray	0.92%	5.33%	3.07%
Tronox	-17.96%	-24.34%	-5.51%

Risk and Volatility

Kuraray has a beta of 0.02, meaning that its share price is 98% less volatile than the S&P 500. Comparatively, Tronox has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Kuraray and Tronox, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kuraray	1	0	0	0	1.00
Tronox	4	4	1	0	1.67

Tronox has a consensus target price of $7.08, suggesting a potential upside of 68.45%. Given Tronox’s stronger consensus rating and higher probable upside, analysts clearly believe Tronox is more favorable than Kuraray.

About Kuraray

Kuraray Co., Ltd. engages in the production and sale of resins, chemicals, fibers, activated carbon, and high-performance membranes and systems worldwide. The Vinyl Acetate segment manufactures and markets functional resins and films, including PVA, PVB and EVAL. The Isoprene segment engages in the manufacture and marketing of SEPTON thermoplastic elastomer, isoprene-related products, and GENESTAR. The Functional Materials segment manufactures and markets methacrylic resin, medical products, and carbon materials. The Fibers and Textiles segment manufactures and sells synthetic fibers and textiles, CLARINO manmade leather, non-woven fabrics, and other products. The Trading segment mainly processes and sells synthetic fibers and manmade leathers. It is also involved in the engineering business; design and construction of various plants; outsourcing of logistics services; temporary staffing/introduction business; design, manufacture, construction, and sale of water treatment equipment; travel and insurance agency business; golf course management; management of accommodation facilities and restaurants; manufacture and sale of hook-and loop fasteners and related products; manufacture and sale of dental materials; warehousing and logistics; and manufacturing and sales of methacrylic resin sheets, as well as provides consulting services. The company was incorporated in 1926 and is headquartered in Tokyo, Japan.

About Tronox

Tronox Holdings plc operates as a vertically integrated manufacturer of TiO2 pigment in North America, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates titanium-bearing mineral sand mines; and engages in beneficiation and smelting operations. It offers TiO2 pigment; ultrafine specialty TiO2; zircon; feedstock; pig iron; monazite; titanium tetrachloride; and other products. The company’s products are used for the manufacture of paints, coatings, plastics, and paper, as well as various other applications. Tronox Holdings plc is based in Stamford, Connecticut.