KMG Chemicals (KMG) versus Minerals Technologies (MTX) Critical Analysis
KMG Chemicals (NYSE: KMG) and Minerals Technologies (NYSE:MTX) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
Insider & Institutional Ownership
73.7% of KMG Chemicals shares are held by institutional investors. Comparatively, 94.4% of Minerals Technologies shares are held by institutional investors. 6.9% of KMG Chemicals shares are held by insiders. Comparatively, 2.2% of Minerals Technologies shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares KMG Chemicals and Minerals Technologies’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|KMG Chemicals||$312.48 million||2.11||$51.47 million||$1.80||30.82|
|Minerals Technologies||$1.62 billion||1.59||$349.20 million||$4.40||16.72|
Minerals Technologies has higher revenue and earnings than KMG Chemicals. Minerals Technologies is trading at a lower price-to-earnings ratio than KMG Chemicals, indicating that it is currently the more affordable of the two stocks.
This table compares KMG Chemicals and Minerals Technologies’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk & Volatility
KMG Chemicals has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Minerals Technologies has a beta of 2.23, suggesting that its stock price is 123% more volatile than the S&P 500.
KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Minerals Technologies pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. KMG Chemicals pays out 6.7% of its earnings in the form of a dividend. Minerals Technologies pays out 4.5% 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. Minerals Technologies is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent recommendations and price targets for KMG Chemicals and Minerals Technologies, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
KMG Chemicals presently has a consensus price target of $37.00, indicating a potential downside of 33.30%. Minerals Technologies has a consensus price target of $80.00, indicating a potential upside of 8.77%. Given Minerals Technologies’ higher probable upside, analysts clearly believe Minerals Technologies is more favorable than KMG Chemicals.
Minerals Technologies beats KMG Chemicals on 9 of the 14 factors compared between the two stocks.
KMG Chemicals Company Profile
KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.
Minerals Technologies Company Profile
Minerals Technologies Inc. is a resource- and technology-based company that develops, produces and markets a range of specialty mineral, mineral-based and synthetic mineral products and related systems and services around the world. It operates through four segments. The Specialty Minerals segment produces and sells the synthetic mineral product precipitated calcium carbonate (PCC), mines mineral ores, and processes and sells natural mineral products, primarily limestone and talc. The Performance Materials segment is a supplier of bentonite and bentonite-related products to industrial and consumer markets globally. The Refractories segment produces and markets monolithic and shaped refractory materials and specialty products, services and application and measurement equipment. The Energy Services segment offers a range of services to improve the production, costs, compliance and environmental impact of activities performed in the oil and gas industry.
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