Trecora Resources (NYSE: TREC) and A. Schulman (NASDAQ:SHLM) are both small-cap basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and price targets for Trecora Resources and A. Schulman, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trecora Resources 0 0 3 0 3.00
A. Schulman 0 2 2 0 2.50

Trecora Resources currently has a consensus target price of $15.67, suggesting a potential upside of 23.85%. A. Schulman has a consensus target price of $35.00, suggesting a potential upside of 12.90%. Given Trecora Resources’ stronger consensus rating and higher possible upside, equities analysts clearly believe Trecora Resources is more favorable than A. Schulman.

Profitability

This table compares Trecora Resources and A. Schulman’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trecora Resources 0.97% 3.94% 2.23%
A. Schulman -14.86% 35.64% 3.29%

Volatility and Risk

Trecora Resources has a beta of 1.56, suggesting that its share price is 56% more volatile than the S&P 500. Comparatively, A. Schulman has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.

Valuation & Earnings

This table compares Trecora Resources and A. Schulman’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Trecora Resources $229.00 million 1.34 $26.34 million $0.09 140.57
A. Schulman $2.42 billion 0.38 $207.01 million ($12.50) -2.48

A. Schulman has higher revenue and earnings than Trecora Resources. A. Schulman is trading at a lower price-to-earnings ratio than Trecora Resources, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

41.6% of Trecora Resources shares are owned by institutional investors. Comparatively, 84.2% of A. Schulman shares are owned by institutional investors. 6.6% of Trecora Resources shares are owned by company insiders. Comparatively, 4.1% of A. Schulman shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

A. Schulman pays an annual dividend of $0.82 per share and has a dividend yield of 2.6%. Trecora Resources does not pay a dividend. A. Schulman pays out -6.6% of its earnings in the form of a dividend.

Summary

Trecora Resources beats A. Schulman on 9 of the 16 factors compared between the two stocks.

Trecora Resources Company Profile

Trecora Resources (TREC) is a provider of high-purity specialty hydrocarbons and waxes. TREC owns and operates a facility located in southeast Texas, just north of Beaumont, which specializes in high-purity hydrocarbons and other petrochemical manufacturing. The Company operates through two segments: specialty petrochemical products and specialty synthetic waxes. The specialty petrochemical products segment operates through South Hampton Resources, Inc. (SHR). The specialty synthetic wax segment operates through Trecora Chemical, Inc. (TC). SHR owns and operates a specialty petrochemical facility that produces hydrocarbons and other petroleum-based products, including isopentane, normal pentane, isohexane and hexane. TC produces specialty polyethylene and poly alpha olefin waxes, and provides custom processing services. In addition, the Company is the 33.4% owner of Al Masane Al Kobra Mining Co., a Saudi Arabian joint stock company.

A. Schulman Company Profile

A. Schulman, Inc. is an international supplier of plastic formulations, resins and services, and provides solutions to its customers’ requirements through custom-formulated products. The Company’s customers span a range of markets, such as packaging, mobility, building and construction, electronics and electrical, agriculture, personal care and hygiene, custom services, and sports, home and leisure. The Company’s segments include Europe, Middle East and Africa (EMEA), the United States and Canada (USCAN), Latin America (LATAM), Asia Pacific (APAC) and Engineered Composites (EC). As of August 31, 2016, the Company operated in six product families, including custom performance colors (CPC), engineered composites, Masterbatch solutions, engineered plastics, specialty powders and distribution services. The CPC product family offers powdered, pelletized and liquid color concentrates that are custom-designed for thermoplastic resins.

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