Praxair (NYSE: PX) and Koppers Holdings (NYSE:KOP) are both commodity chemicals – nec companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Praxair and Koppers Holdings, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Praxair 2 7 6 0 2.27
Koppers Holdings 0 1 3 0 2.75

Praxair currently has a consensus price target of $144.27, indicating a potential downside of 3.14%. Koppers Holdings has a consensus price target of $45.75, indicating a potential downside of 2.14%. Given Koppers Holdings’ stronger consensus rating and higher probable upside, analysts plainly believe Koppers Holdings is more favorable than Praxair.

Insider and Institutional Ownership

85.3% of Praxair shares are owned by institutional investors. Comparatively, 87.8% of Koppers Holdings shares are owned by institutional investors. 0.2% of Praxair shares are owned by company insiders. Comparatively, 3.9% of Koppers Holdings shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

Praxair pays an annual dividend of $3.15 per share and has a dividend yield of 2.1%. Koppers Holdings does not pay a dividend. Praxair pays out 56.0% of its earnings in the form of a dividend. Praxair has increased its dividend for 12 consecutive years and Koppers Holdings has increased its dividend for 5 consecutive years.

Profitability

This table compares Praxair and Koppers Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Praxair 14.56% 27.13% 8.34%
Koppers Holdings 3.02% 153.51% 6.24%

Risk & Volatility

Praxair has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, Koppers Holdings has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Earnings & Valuation

This table compares Praxair and Koppers Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Praxair $10.53 billion 4.05 $1.50 billion $5.62 26.50
Koppers Holdings $1.42 billion 0.68 $29.30 million $1.96 23.85

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

Summary

Praxair beats Koppers Holdings on 10 of the 17 factors compared between the two stocks.

About Praxair

Praxair, Inc. is an industrial gas company. The Company’s operations are organized into five segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. In addition, it operates its surface technologies business through its subsidiary, Praxair Surface Technologies, Inc., which represents the fifth segment. Its operations consist of two product lines: industrial gases and surface technologies. Its industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases). It also designs, engineers and builds equipment that produces industrial gases primarily for internal use. Its Surface Technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.

About Koppers Holdings

Koppers Holdings Inc. is a global integrated provider of treated wood products, wood treatment chemicals and carbon compounds. The Company operates through three segments: Railroad and Utility Products and Services (RUPS), Carbon Materials and Chemicals (CMC) and Performance Chemicals (PC). The RUPS business sells treated and untreated wood products, rail joint bars and services primarily to the railroad markets. The primary products supplied by PC business are copper-based wood preservatives, including micronized copper quaternary and micronized copper azole (MicroPro), micronized pigments (MicroShades) and chromated copper arsenate. Through CMC business, the Company processes coal tar into a range of products, including carbon pitch, creosote and carbon black feedstock. Its products and services are used in a range of markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber and construction industries.

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