Critical Survey: Dow Chemical (DWDP) and PolyOne (POL)
Dow Chemical (NYSE: DWDP) and PolyOne (NYSE:POL) are both mid-cap basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.
Volatility & Risk
Dow Chemical has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, PolyOne has a beta of 1.83, meaning that its stock price is 83% more volatile than the S&P 500.
This table compares Dow Chemical and PolyOne’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Dow Chemical||$48.16 billion||3.47||$4.32 billion||$2.08||34.32|
|PolyOne||$3.34 billion||1.07||$165.20 million||($0.76)||-58.45|
Dow Chemical has higher revenue and earnings than PolyOne. PolyOne is trading at a lower price-to-earnings ratio than Dow Chemical, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for Dow Chemical and PolyOne, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Dow Chemical presently has a consensus price target of $79.94, suggesting a potential upside of 11.98%. PolyOne has a consensus price target of $43.17, suggesting a potential downside of 2.82%. Given Dow Chemical’s higher probable upside, equities analysts plainly believe Dow Chemical is more favorable than PolyOne.
This table compares Dow Chemical and PolyOne’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
68.8% of Dow Chemical shares are held by institutional investors. Comparatively, 93.8% of PolyOne shares are held by institutional investors. 0.9% of Dow Chemical shares are held by insiders. Comparatively, 1.6% of PolyOne shares are held by 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.
Dow Chemical pays an annual dividend of $1.52 per share and has a dividend yield of 2.1%. PolyOne pays an annual dividend of $0.70 per share and has a dividend yield of 1.6%. Dow Chemical pays out 73.1% of its earnings in the form of a dividend. PolyOne pays out -92.1% 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. PolyOne has raised its dividend for 5 consecutive years.
PolyOne beats Dow Chemical on 9 of the 17 factors compared between the two stocks.
Dow Chemical Company Profile
DowDuPont Inc. is a holding company formed through the merger of equals between The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont). The Company’s business divisions include Agriculture division, Material Science division, and a Specialty Products division. The Agriculture Division offers a complete portfolio of products and technologies, traits and crop protection. The Materials Science Division provides solutions, such as packaging, transportation, infrastructure and customer care. The Specialty Products division provides solution for industrial, safety, energy, food, nutrition, construction, electronics and consumer goods industries. The company provides solutions to a range of markets, including aerospace, automotive, consumer electronics, military, printing, renewable energy, semiconductors, child nutrition, dietary supplements, carpet and apparel, fertilizer, and oil and gas/energy.
PolyOne Company Profile
PolyOne Corporation (PolyOne) provides specialized polymer materials, services and solutions. The Company’s segments include Color, Additives and Inks; Specialty Engineered Materials; Performance Products and Solutions, and PolyOne Distribution. The Color, Additives and Inks segment provides custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets. The Specialty Engineered Materials segment provides specialty polymer formulations, services and solutions for designers, assemblers and processors of thermoplastic materials. The Performance Products and Solutions segment consists of the Geon Performance Materials and Producer Services business units. As of December 31, 2016, the PolyOne Distribution segment distributed more than 4,000 grades of engineering and commodity grade resins.
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