Innospec (NASDAQ:IOSP) and International Flavors & Fragrances (NYSE:IFF) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.
Institutional and Insider Ownership
92.9% of Innospec shares are owned by institutional investors. Comparatively, 94.4% of International Flavors & Fragrances shares are owned by institutional investors. 1.4% of Innospec shares are owned by company insiders. Comparatively, 0.4% of International Flavors & Fragrances shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Risk & Volatility
Innospec has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500. Comparatively, International Flavors & Fragrances has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.
Profitability
This table compares Innospec and International Flavors & Fragrances' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Innospec | 2.92% | 9.14% | 6.01% |
International Flavors & Fragrances | 7.44% | 11.00% | 5.10% |
Analyst Recommendations
This is a breakdown of recent ratings and recommmendations for Innospec and International Flavors & Fragrances, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Innospec | 0 | 0 | 1 | 0 | 3.00 |
International Flavors & Fragrances | 0 | 4 | 11 | 0 | 2.73 |
Innospec currently has a consensus target price of $110.00, indicating a potential upside of 7.29%. International Flavors & Fragrances has a consensus target price of $144.4571, indicating a potential upside of 2.98%. Given Innospec's stronger consensus rating and higher possible upside, equities analysts plainly believe Innospec is more favorable than International Flavors & Fragrances.
Dividends
Innospec pays an annual dividend of $1.04 per share and has a dividend yield of 1.0%. International Flavors & Fragrances pays an annual dividend of $3.08 per share and has a dividend yield of 2.2%. Innospec pays out 19.9% of its earnings in the form of a dividend. International Flavors & Fragrances pays out 49.9% 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. International Flavors & Fragrances has raised its dividend for 11 consecutive years. International Flavors & Fragrances is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Innospec and International Flavors & Fragrances' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Innospec | $1.51 billion | 1.67 | $112.20 million | $5.22 | 19.64 |
International Flavors & Fragrances | $5.14 billion | 6.79 | $455.87 million | $6.17 | 22.74 |
International Flavors & Fragrances has higher revenue and earnings than Innospec. Innospec is trading at a lower price-to-earnings ratio than International Flavors & Fragrances, indicating that it is currently the more affordable of the two stocks.
Summary
International Flavors & Fragrances beats Innospec on 10 of the 17 factors compared between the two stocks.