Trinseo (NYSE: TSE) and W.R. Grace & Co. (NYSE:GRA) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitabiliy and valuation.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Trinseo and W.R. Grace & Co., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trinseo 0 2 2 0 2.50
W.R. Grace & Co. 0 3 6 0 2.67

Trinseo presently has a consensus target price of $62.50, indicating a potential downside of 3.85%. W.R. Grace & Co. has a consensus target price of $79.89, indicating a potential upside of 13.27%. Given W.R. Grace & Co.’s stronger consensus rating and higher possible upside, analysts plainly believe W.R. Grace & Co. is more favorable than Trinseo.

Profitability

This table compares Trinseo and W.R. Grace & Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trinseo 9.14% 80.69% 15.56%
W.R. Grace & Co. 8.08% 40.62% 6.03%

Institutional & Insider Ownership

84.1% of W.R. Grace & Co. shares are owned by institutional investors. 0.5% of Trinseo shares are owned by insiders. Comparatively, 1.3% of W.R. Grace & Co. shares are owned by 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.

Valuation & Earnings

This table compares Trinseo and W.R. Grace & Co.’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Trinseo $3.93 billion 0.73 $523.32 million $7.74 8.40
W.R. Grace & Co. $1.63 billion 2.96 $384.00 million $1.90 37.12

Trinseo has higher revenue and earnings than W.R. Grace & Co.. Trinseo is trading at a lower price-to-earnings ratio than W.R. Grace & Co., indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Trinseo has a beta of 2.4, meaning that its share price is 140% more volatile than the S&P 500. Comparatively, W.R. Grace & Co. has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Dividends

Trinseo pays an annual dividend of $1.20 per share and has a dividend yield of 1.8%. W.R. Grace & Co. pays an annual dividend of $0.84 per share and has a dividend yield of 1.2%. Trinseo pays out 15.5% of its earnings in the form of a dividend. W.R. Grace & Co. pays out 44.2% 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. Trinseo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Trinseo beats W.R. Grace & Co. on 9 of the 16 factors compared between the two stocks.

Trinseo Company Profile

Trinseo S.A. is a materials company engaged in the manufacture and marketing of synthetic rubber, latex and plastics. The Company’s segments include Latex Binders, Synthetic Rubber, Performance Plastics, Basic Plastics, Feedstocks and Americas Styrenics. The Latex Binders segment produces styrene-butadiene latex (SB latex) and other latex polymers and binders. The Synthetic Rubber segment produces synthetic rubber products used in tires, impact modifiers and technical rubber products. The Performance Plastics segment produces compounds and blends and specialized acrylonitrile-butadiene-styrene (ABS) grades. The Basic Plastics segment produces styrenic polymers, including polystyrene, basic ABS, and styrene-acrylonitrile (SAN) products, as well as polycarbonate (PC). The Feedstocks segment includes its production and procurement of styrene monomer outside of North America. The Americas Styrenics segment consists of the operations of its joint venture, Americas Styrenics LLC.

W.R. Grace & Co. Company Profile

W. R. Grace & Co. (Grace) is engaged in the production and sale of specialty chemicals and specialty materials. The Company operates in two segments: Grace Catalysts Technologies and Grace Materials Technologies. The Grace Catalysts Technologies segment includes catalysts and related products and technologies used in refining, petrochemical and other chemical manufacturing applications. The Grace Materials Technologies segment includes specialty materials, including silica-based and silica-alumina-based materials, used in coatings, consumer, industrial, and pharmaceutical applications. It Grace Catalysts Technologies segment produces and sells catalysts and related products and technologies used in refining, petrochemical and other chemical manufacturing applications, including Fluid catalytic cracking catalysts (FCC), Hydroprocessing catalysts (HPC), and Polyolefin catalysts and catalyst supports.

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