Air Products and Chemicals (NYSE: APD) and Eastman Chemical (NYSE:EMN) are both large-cap basic materials companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, dividends, risk, institutional ownership, profitability and valuation.

Valuation & Earnings

This table compares Air Products and Chemicals and Eastman Chemical’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Air Products and Chemicals $9.95 billion 3.31 $3.18 billion $13.33 11.35
Eastman Chemical $9.20 billion 1.42 $2.15 billion $6.32 14.32

Air Products and Chemicals has higher revenue and earnings than Eastman Chemical. Air Products and Chemicals is trading at a lower price-to-earnings ratio than Eastman Chemical, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Air Products and Chemicals has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Air Products and Chemicals and Eastman Chemical, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Air Products and Chemicals 1 5 7 0 2.46
Eastman Chemical 0 4 6 0 2.60

Air Products and Chemicals presently has a consensus price target of $157.15, indicating a potential upside of 3.86%. Eastman Chemical has a consensus price target of $91.22, indicating a potential upside of 0.81%. Given Air Products and Chemicals’ higher possible upside, research analysts plainly believe Air Products and Chemicals is more favorable than Eastman Chemical.

Profitability

This table compares Air Products and Chemicals and Eastman Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Air Products and Chemicals 34.63% 17.23% 8.25%
Eastman Chemical 10.11% 22.54% 6.74%

Institutional & Insider Ownership

87.9% of Air Products and Chemicals shares are held by institutional investors. Comparatively, 82.1% of Eastman Chemical shares are held by institutional investors. 0.4% of Air Products and Chemicals shares are held by company insiders. Comparatively, 1.1% of Eastman Chemical shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Air Products and Chemicals pays an annual dividend of $3.80 per share and has a dividend yield of 2.5%. Eastman Chemical pays an annual dividend of $2.04 per share and has a dividend yield of 2.3%. Air Products and Chemicals pays out 28.5% of its earnings in the form of a dividend. Eastman Chemical pays out 32.3% 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. Air Products and Chemicals has increased its dividend for 5 consecutive years and Eastman Chemical has increased its dividend for 34 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Air Products and Chemicals beats Eastman Chemical on 11 of the 17 factors compared between the two stocks.

Air Products and Chemicals Company Profile

Air Products and Chemicals, Inc., is an industrial gases company. The Company’s Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company operates through five segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, and Corporate and other.

Eastman Chemical Company Profile

Eastman Chemical Company (Eastman) is an advanced materials and specialty additives company. The Company’s segments include Additives & Functional Products (AFP), Advanced Materials (AM), Chemical Intermediates (CI), and Fibers. In the AFP segment, it manufactures chemicals for products in the coatings, tires, consumables, building and construction, industrial applications, including solar energy markets, animal nutrition, care chemicals, crop protection, and energy markets. In the AM segment, it produces and markets its polymers, films, and plastics with differentiated performance properties for end uses in transportation, consumables, building and construction, durable goods, and health and wellness products. The CI segment leverages large scale and vertical integration from the cellulose and acetyl, olefins, and alkylamines streams to support its specialty operating segments. Its product lines in Fibers segment include Acetate Tow, Acetate Yarn and Acetyl Chemical Products.

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