Investors are weighing the merits of two basic materials companies: SUMITOMO CHEMCL and Compass Minerals International. This analysis evaluates which stock presents a more compelling investment opportunity based on several financial metrics, including profitability, risk, dividends, valuation, and analyst recommendations.
Profitability Comparison
Examining the profitability of both companies reveals significant differences. SUMITOMO CHEMCL boasts a net margin of 0.35%, indicating a modest profit after expenses. In contrast, Compass Minerals International faces challenges, exhibiting a net margin of -9.87%, reflecting losses rather than profits. Additionally, SUMITOMO CHEMCL’s return on equity stands at 0.80% and return on assets at 0.25%. In stark contrast, Compass Minerals’ returns are negative, with a return on equity of -16.70% and a return on assets of -2.77%.
Earnings and Valuation Insights
The earnings and valuation metrics further emphasize the disparity between the two firms. SUMITOMO CHEMCL reported gross revenue of $17.12 billion and a net income of $254.70 million, translating to an earnings per share (EPS) of $0.17 and a price-to-earnings (P/E) ratio of 3.71. Conversely, Compass Minerals International generated gross revenue of only $1.12 billion, with a net loss of $206.10 million, resulting in an EPS of ($2.92) and a negative P/E ratio of -6.62. While Compass Minerals trades at a lower P/E ratio, suggesting affordability, the overall financial health of SUMITOMO CHEMCL appears more robust.
Analysts remain cautious but optimistic regarding Compass Minerals, which has garnered a consensus price target of $20.00, indicating a potential upside of 3.47% from its current trading levels. This contrasts with SUMITOMO CHEMCL, which has not received any strong buy ratings, reflecting analysts’ more favorable view of Compass Minerals.
Volatility and Risk Assessment
When assessing risk, SUMITOMO CHEMCL exhibits lower volatility, with a beta of 0.25, indicating that its stock is approximately 75% less volatile than the broader S&P 500 index. In contrast, Compass Minerals has a beta of 1.07, suggesting it is 7% more volatile than the market, which may concern risk-averse investors.
Institutional ownership also plays a critical role in assessing stability and confidence in a company’s future. An impressive 99.8% of Compass Minerals International shares are owned by institutional investors, indicating strong support from large money managers. In comparison, only 1.5% of its shares are held by insiders, suggesting limited confidence among company executives regarding future performance.
Company Overviews
Founded in 1913 and headquartered in Tokyo, Japan, Sumitomo Chemical Company, Limited operates across various sectors, including chemicals, energy, and health sciences. Its diverse portfolio includes synthetic resins, crop protection chemicals, and pharmaceuticals, positioning the company as a significant player in the global market.
On the other hand, Compass Minerals International, Inc., established in 1844 and based in Overland Park, Kansas, focuses on essential minerals, primarily through its Salt and Plant Nutrition segments. The Salt segment produces various forms of sodium chloride, while the Plant Nutrition segment offers sulfate of potash specialty fertilizers. The company’s long-standing presence in the market underscores its importance in the mineral sector.
In summary, while both SUMITOMO CHEMCL and Compass Minerals International operate within the basic materials industry, their financial performance and market positions differ significantly. Investors may find SUMITOMO CHEMCL’s stronger profitability and stability more attractive, while those seeking potential growth at a lower entry point might consider Compass Minerals based on its analyst ratings and price targets.