Critical Analysis: NL Industries (NYSE:NL) & Sociedad Quimica y Minera (NYSE:SQM)

NL Industries (NYSE:NL) and Sociedad Quimica y Minera (NYSE:SQM) are both basic materials companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Institutional & Insider Ownership

10.7% of NL Industries shares are owned by institutional investors. Comparatively, 12.4% of Sociedad Quimica y Minera shares are owned by institutional investors. 0.3% of NL Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

NL Industries pays an annual dividend of $0.36 per share and has a dividend yield of 6.3%. Sociedad Quimica y Minera pays an annual dividend of $0.14 per share and has a dividend yield of 0.2%. NL Industries pays out 180.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sociedad Quimica y Minera pays out 7.7% of its earnings in the form of a dividend. NL Industries has increased its dividend for 2 consecutive years. NL Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares NL Industries and Sociedad Quimica y Minera’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NL Industries	6.10%	2.36%	1.83%
Sociedad Quimica y Minera	12.12%	9.79%	4.54%

Valuation & Earnings

This table compares NL Industries and Sociedad Quimica y Minera”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NL Industries	$145.90 million	1.91	$67.23 million	$0.20	28.50
Sociedad Quimica y Minera	$4.33 billion	4.29	$685.12 million	$1.83	35.53

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for NL Industries and Sociedad Quimica y Minera, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NL Industries	0	1	0	0	2.00
Sociedad Quimica y Minera	1	8	3	0	2.17

Sociedad Quimica y Minera has a consensus price target of $53.39, suggesting a potential downside of 17.89%. Given Sociedad Quimica y Minera’s stronger consensus rating and higher probable upside, analysts plainly believe Sociedad Quimica y Minera is more favorable than NL Industries.

Volatility and Risk

NL Industries has a beta of 0.28, indicating that its share price is 72% less volatile than the S&P 500. Comparatively, Sociedad Quimica y Minera has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500.

Summary

Sociedad Quimica y Minera beats NL Industries on 14 of the 17 factors compared between the two stocks.

About NL Industries

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in Europe, North America, the Asia Pacific, and internationally. The company manufactures and sells mechanical and electronic cabinet locks and other locking mechanisms, including disc tumbler locks; pin tumbler locking mechanisms under KeSet, System 64, TuBar, and Turbine brands; and electronic locks under CompX eLock and StealthLock brands for use in various applications, such as mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. It also offers original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, and other exhaust components; gauges, such as GPS speedometers and tachometers; mechanical and electronic controls and throttles; wake enhancement devices, trim tabs, steering wheels, and other billet aluminum accessories; dash panels, LED indicators, wire harnesses, and other accessories; and grab handles, pin cleats, and other accessories; primarily for performance and ski/wakeboard and performance boats. In addition, the company produces and markets value-added titanium dioxide pigments, a base industrial product used in imparting whiteness, brightness, opacity, and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals, and other industrial and consumer products. The company sells its component products directly to original equipment manufacturers, as well as through distributors. NL Industries, Inc. was founded in 1891 and is based in Dallas, Texas. NL Industries, Inc. operates as a subsidiary of Valhi, Inc.

About Sociedad Quimica y Minera

Sociedad Química y Minera de Chile S.A. operates as a mining company worldwide. The company offers specialty plant nutrients, including sodium potassium nitrate, specialty blends, and other specialty fertilizers under Ultrasol, Qrop, Speedfol, Allganic, Ultrasoline, ProP, and Prohydric brands. It also provides iodine and its derivatives for use in medical, agricultural, industrial, and human and animal nutrition products comprising x-ray contrast media, biocides, antiseptics and disinfectants, pharmaceutical intermediates, polarizing films for LCD and LED screens, chemicals, organic compounds, and pigments, as well as added to edible salt to prevent iodine deficiency disorders. In addition, the company produces lithium carbonate and lithium hydroxide which are used in the production of cathode material for secondary batteries; lithium chloride; and basic lithium chemicals and lithium derivatives used in lubricating greases for heat-resistant glass, chips for the ceramic and glazing industry, and air conditioning chemicals, as well as other pharmaceutical syntheses and metal alloys. Further, it produces potassium sulfate; and potassium chloride which is used as a fertilizer for the application of potassium to different crops. Additionally, the company produces and markets industrial chemicals, such as sodium nitrate mainly used in the production of glass and explosives, metal processing and recycling, and production of insulating materials and adhesives; potassium nitrate used as a raw material to produce frits and special glass, as well as in the enamel, metal treatment, and pyrotechnic sectors; solar salts used as a thermal storage medium in solar power generation plants; and potassium chloride as an additive in oil drilling and food processing sectors. Furthermore, it is involved in the commercialization of third-party fertilizers; and exploration of copper, gold, and silver deposits. The company was founded in 1926 and is headquartered in Santiago, Chile.