Innospec (NASDAQ: IOSP) and Terravia (OTCMKTS:TVIAQ) are both small-cap basic materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Risk & Volatility

Innospec has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500. Comparatively, Terravia has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Dividends

Innospec pays an annual dividend of $0.78 per share and has a dividend yield of 1.1%. Terravia does not pay a dividend. Innospec pays out 21.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current ratings and price targets for Innospec and Terravia, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Innospec 0 2 1 0 2.33
Terravia 0 1 0 0 2.00

Innospec currently has a consensus price target of $65.00, indicating a potential downside of 11.14%. Terravia has a consensus price target of $1.50, indicating a potential upside of 49,900.00%. Given Terravia’s higher possible upside, analysts clearly believe Terravia is more favorable than Innospec.

Profitability

This table compares Innospec and Terravia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Innospec 7.45% 15.05% 8.38%
Terravia N/A N/A N/A

Insider & Institutional Ownership

91.1% of Innospec shares are held by institutional investors. Comparatively, 0.2% of Terravia shares are held by institutional investors. 2.0% of Innospec shares are held by insiders. Comparatively, 10.1% of Terravia shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Innospec and Terravia’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Innospec $883.40 million 2.00 $81.30 million $3.61 20.26
Terravia $18.48 million 0.02 -$101.55 million ($1.10) 0.00

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

Summary

Innospec beats Terravia on 12 of the 16 factors compared between the two stocks.

Innospec Company Profile

Innospec Inc. is a specialty chemicals company engaged in developing, manufacturing, blending, marketing and supplying of specialty chemicals for use as fuel additives and ingredients for personal care, home care, agrochemical, mining and other applications and oilfield chemicals. The Company operates through four business segments: Fuel Specialties, Performance Chemicals, Oilfield Services and Octane Additives. Its Fuel Specialties develops, manufactures, blends, markets and supplies various specialty chemical products that are used as additives for a range of fuels. Its Performance Chemicals provides technology-based solutions. Its Oilfield Services business supplies drilling, completion and production chemicals. Its Octane Additives business manufactures a fuel additive for use in automotive gasoline and provides services in respect of environmental remediation. Its customers include oil and gas exploration and production companies, fuel users, and oil refiners among others.

Terravia Company Profile

Solazyme, Inc. creates renewable oils and bioproducts. The Company’s technology uses microalgae in an industrial fermentation process to transform a range of plant-based sugars into triglyceride oils and other bioproducts. The Company offers Algenist, a skin and personal care product available at Sephora S.A. and its affiliates, QVC, Inc., SpaceNK Limited, select Nordstrom stores and ULTA Beauty. It offers intermediates/ingredients, such as Tailored oils, powdered oils, and other closely related products targeted at customers in the industrial products, food products and personal care products markets. The Company’s commercial focus is to sell oils, encapsulated oils and whole algal powdered products to companies that use them as intermediates and ingredients.

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