Albemarle Corporation (NYSE: ALB) and Praxair (NYSE:PX) are both large-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.

Valuation & Earnings

This table compares Albemarle Corporation and Praxair’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Albemarle Corporation $2.81 billion 5.28 $744.58 million $7.80 17.22
Praxair $10.92 billion 3.60 $3.54 billion $5.35 25.72

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

Dividends

Albemarle Corporation pays an annual dividend of $1.28 per share and has a dividend yield of 1.0%. Praxair pays an annual dividend of $3.15 per share and has a dividend yield of 2.3%. Albemarle Corporation pays out 16.4% of its earnings in the form of a dividend. Praxair pays out 58.9% 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. Albemarle Corporation has increased its dividend for 12 consecutive years and Praxair has increased its dividend for 13 consecutive years. Praxair is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

83.7% of Albemarle Corporation shares are held by institutional investors. Comparatively, 85.3% of Praxair shares are held by institutional investors. 0.7% of Albemarle Corporation shares are held by company insiders. Comparatively, 0.2% of Praxair shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Albemarle Corporation has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500. Comparatively, Praxair has a beta of 0.93, indicating that its stock price is 7% less volatile than the S&P 500.

Profitability

This table compares Albemarle Corporation and Praxair’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Albemarle Corporation 31.49% 11.59% 5.42%
Praxair 14.10% 27.93% 8.25%

Analyst Ratings

This is a breakdown of current ratings and target prices for Albemarle Corporation and Praxair, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Albemarle Corporation 0 4 11 1 2.81
Praxair 2 7 4 0 2.15

Albemarle Corporation presently has a consensus price target of $113.06, indicating a potential downside of 15.81%. Praxair has a consensus price target of $136.89, indicating a potential downside of 0.52%. Given Praxair’s higher possible upside, analysts plainly believe Praxair is more favorable than Albemarle Corporation.

Summary

Albemarle Corporation beats Praxair on 10 of the 18 factors compared between the two stocks.

Albemarle Corporation Company Profile

Albemarle Corporation is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consist of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services. As of December 31, 2016, the Company and its joint ventures operated 31 production and research and development (R&D) facilities, as well as a number of administrative and sales offices, around the world.

Praxair Company Profile

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.

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