Ferro (NYSE: FOE) and Orion Engineered Carbons S.A (NYSE:OEC) are both small-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Dividends

Orion Engineered Carbons S.A pays an annual dividend of $0.81 per share and has a dividend yield of 3.5%. Ferro does not pay a dividend. Orion Engineered Carbons S.A pays out 69.2% of its earnings in the form of a dividend.

Profitability

This table compares Ferro and Orion Engineered Carbons S.A’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ferro 3.44% 35.77% 7.57%
Orion Engineered Carbons S.A 5.50% 137.36% 8.91%

Analyst Ratings

This is a breakdown of current ratings for Ferro and Orion Engineered Carbons S.A, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ferro 0 0 4 0 3.00
Orion Engineered Carbons S.A 0 1 4 0 2.80

Ferro currently has a consensus price target of $23.00, suggesting a potential downside of 1.71%. Orion Engineered Carbons S.A has a consensus price target of $25.40, suggesting a potential upside of 9.25%. Given Orion Engineered Carbons S.A’s higher probable upside, analysts clearly believe Orion Engineered Carbons S.A is more favorable than Ferro.

Insider & Institutional Ownership

97.9% of Ferro shares are owned by institutional investors. Comparatively, 54.6% of Orion Engineered Carbons S.A shares are owned by institutional investors. 2.0% of Ferro shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Ferro and Orion Engineered Carbons S.A’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ferro $1.15 billion 1.71 -$20.81 million $0.53 44.15
Orion Engineered Carbons S.A $1.14 billion 1.21 $49.38 million $1.17 19.87

Orion Engineered Carbons S.A has lower revenue, but higher earnings than Ferro. Orion Engineered Carbons S.A is trading at a lower price-to-earnings ratio than Ferro, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Ferro has a beta of 1.9, meaning that its stock price is 90% more volatile than the S&P 500. Comparatively, Orion Engineered Carbons S.A has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Summary

Ferro beats Orion Engineered Carbons S.A on 8 of the 15 factors compared between the two stocks.

Ferro Company Profile

Ferro Corporation (Ferro) produces specialty materials that are sold to a range of manufacturers. The Company’s segments include Performance Coatings; Performance Colors and Glass, and Pigments, Powders and Oxides. Its Performance Coatings segment includes Tile Coating Systems and Porcelain Enamel. Its manufacturers make products for various end-use markets. The Company’s products fall into two general categories: functional coatings, which perform specific functions in the manufacturing processes and end products of its customers, and color solutions, which provide aesthetic and performance characteristics to its customers’ products. Its products are used in a range of product applications in markets, including appliances, automobiles, building and renovation, electronics, household furnishings, industrial products and packaging.

Orion Engineered Carbons S.A Company Profile

Orion Engineered Carbons S.A. is a producer of carbon black. The Company operates through two segments: Specialty Carbon Black and Rubber Carbon Black. The Specialty Carbon Black segment is engaged in the production of specialty carbon black. The Rubber Carbon Black segment is involved in the production of rubber carbon black. As of December 31, 2016, it operated a diversified carbon black business with over 280 specialty carbon black grades and approximately 80 rubber carbon black grades. Carbon black is used as a pigment and as a performance additive in coatings, polymers, printing and special applications (specialty carbon black), and in the reinforcement of rubber in tires and mechanical rubber goods (rubber carbon black). As of December 31, 2016, it operated a global platform of 13 production facilities in Europe, North and South America, Asia and South Africa and three sales companies, as well as one jointly-owned production plant in Germany.

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