Reviewing LyondellBasell Industries (NYSE:LYB) and CF Industries (NYSE:CF)

CF Industries (NYSE:CF) and LyondellBasell Industries (NYSE:LYB) are both large-cap materials companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.

Dividends

CF Industries pays an annual dividend of $2.40 per share and has a dividend yield of 1.9%. LyondellBasell Industries pays an annual dividend of $2.76 per share and has a dividend yield of 4.3%. CF Industries pays out 16.9% of its earnings in the form of a dividend. LyondellBasell Industries pays out 69.7% 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. CF Industries has increased its dividend for 3 consecutive years and LyondellBasell Industries has increased its dividend for 14 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for CF Industries and LyondellBasell Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CF Industries	3	12	6	1	2.23
LyondellBasell Industries	3	9	7	1	2.30

CF Industries currently has a consensus target price of $123.30, indicating a potential downside of 1.28%. LyondellBasell Industries has a consensus target price of $73.22, indicating a potential upside of 14.68%. Given LyondellBasell Industries’ stronger consensus rating and higher possible upside, analysts plainly believe LyondellBasell Industries is more favorable than CF Industries.

Risk & Volatility

CF Industries has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, LyondellBasell Industries has a beta of 0.29, suggesting that its stock price is 71% less volatile than the S&P 500.

Earnings and Valuation

This table compares CF Industries and LyondellBasell Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CF Industries	$7.08 billion	2.58	$1.46 billion	$14.17	8.81
LyondellBasell Industries	$30.15 billion	0.68	-$738.00 million	$3.96	16.12

CF Industries has higher earnings, but lower revenue than LyondellBasell Industries. CF Industries is trading at a lower price-to-earnings ratio than LyondellBasell Industries, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares CF Industries and LyondellBasell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CF Industries	27.48%	24.52%	13.86%
LyondellBasell Industries	4.06%	21.94%	6.73%

Insider & Institutional Ownership

93.1% of CF Industries shares are held by institutional investors. Comparatively, 71.2% of LyondellBasell Industries shares are held by institutional investors. 0.5% of CF Industries shares are held by company insiders. Comparatively, 0.1% of LyondellBasell Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

CF Industries beats LyondellBasell Industries on 10 of the 17 factors compared between the two stocks.

About CF Industries

CF Industries Holdings, Inc. is a producer and distributor of nitrogen fertilizer and related products. Its main offerings include ammonia, granular urea, urea ammonium nitrate (UAN) and ammonium nitrate, which are used primarily to support crop production. The company also supplies nitrogen products for industrial applications, including emissions control and chemical manufacturing. Founded in 1946 as the Central Farmers Fertilizer Company, CF Industries grew from a cooperative serving agricultural retailers into a major nitrogen producer.

About LyondellBasell Industries

LyondellBasell Industries (NYSE: LYB) is a global chemicals and plastics company that makes materials and products used by manufacturers in a range of industries. Its businesses span the production of olefins, such as ethylene and propylene, and polyolefins, including polyethylene and polypropylene. The company also produces intermediates and derivatives, develops advanced polymer compounds, and provides chemical-process technology and related services. Its products are used in applications including packaging, transportation, construction, consumer goods and healthcare.