Kraton Corporation (NYSE: KRA) and Cabot Corporation (NYSE:CBT) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, institutional ownership, dividends, earnings, valuation and risk.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Kraton Corporation and Cabot Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kraton Corporation 0 1 2 0 2.67
Cabot Corporation 0 3 4 0 2.57

Kraton Corporation currently has a consensus price target of $60.00, indicating a potential upside of 22.37%. Cabot Corporation has a consensus price target of $60.33, indicating a potential downside of 1.03%. Given Kraton Corporation’s stronger consensus rating and higher possible upside, equities analysts plainly believe Kraton Corporation is more favorable than Cabot Corporation.

Volatility and Risk

Kraton Corporation has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500. Comparatively, Cabot Corporation has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Institutional and Insider Ownership

97.4% of Kraton Corporation shares are held by institutional investors. Comparatively, 84.3% of Cabot Corporation shares are held by institutional investors. 5.0% of Kraton Corporation shares are held by insiders. Comparatively, 2.5% of Cabot Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Kraton Corporation and Cabot Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kraton Corporation 1.27% 14.19% 2.56%
Cabot Corporation 8.87% 15.71% 7.10%

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kraton Corporation $1.85 billion 0.83 $338.62 million $0.76 64.51
Cabot Corporation $2.61 billion 1.45 $488.00 million $3.81 16.00

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

Dividends

Cabot Corporation pays an annual dividend of $1.26 per share and has a dividend yield of 2.1%. Kraton Corporation does not pay a dividend. Cabot Corporation pays out 33.1% of its earnings in the form of a dividend. Kraton Corporation has increased its dividend for 5 consecutive years.

Summary

Cabot Corporation beats Kraton Corporation on 9 of the 17 factors compared between the two stocks.

Kraton Corporation Company Profile

Kraton Corporation, formerly Kraton Performance Polymers, Inc., is a specialty chemicals company. The Company manufactures styrenic block copolymers (SBCs) and other engineered polymers. The Company also produces specialty products primarily derived from pine wood pulping co-products. The Company operates through two segments: Polymer Segment, which comprises SBCs and other engineered polymers business, and Chemical Segment, which comprises pine-based specialty products business. Its SBCs are used in a range of applications, including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, paving, roofing and footwear products. The Company also sells isoprene rubber (IR) and isoprene rubber latex (IRL), which are non-SBC products primarily used in applications, such as medical products, personal care, adhesives, tackifiers, paints and coatings. It offers crude tall oil (CTO) and crude sulfate turpentine (CST).

Cabot Corporation Company Profile

Cabot Corporation is a global specialty chemicals and performance materials company. The Company operates through four business segments: reinforcement materials, performance chemicals, purification solutions and specialty fluids. Reinforcement materials’ rubber grade carbon blacks are used to enhance the physical properties of the systems and applications in which they are incorporated. Its rubber blacks products are used in tires and industrial products. Performance Chemicals consists of two businesses: specialty carbons and formulations business, and metal oxides business. Purification Solutions’ activated carbon products are used for the purification of water, air and pharmaceuticals, among others, as either a colorant or a decolorizing agent in the production of food and beverage applications. Its specialty fluids segment produces and markets cesium formate as a drilling and completion fluid for use in high pressure and high temperature oil and gas well construction.

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