Eastman Chemical (NYSE:EMN) and Southern Copper (NYSE:SCCO) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.
Profitability
This table compares Eastman Chemical and Southern Copper's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Eastman Chemical | 8.85% | 16.76% | 6.27% |
| Southern Copper | 18.10% | 19.25% | 8.14% |
Volatility & Risk
Eastman Chemical has a beta of 1.66, suggesting that its stock price is 66% more volatile than the S&P 500. Comparatively, Southern Copper has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.
Insider & Institutional Ownership
79.7% of Eastman Chemical shares are held by institutional investors. Comparatively, 6.9% of Southern Copper shares are held by institutional investors. 1.7% of Eastman Chemical shares are held by company insiders. Comparatively, 0.5% of Southern Copper shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Eastman Chemical and Southern Copper's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Eastman Chemical | $9.27 billion | 1.03 | $759 million | $7.13 | 9.84 |
| Southern Copper | $7.29 billion | 4.42 | $1.49 billion | $1.92 | 21.70 |
Southern Copper has lower revenue, but higher earnings than Eastman Chemical. Eastman Chemical is trading at a lower price-to-earnings ratio than Southern Copper, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent recommendations for Eastman Chemical and Southern Copper, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Eastman Chemical | 0 | 6 | 13 | 0 | 2.68 |
| Southern Copper | 3 | 4 | 2 | 0 | 1.89 |
Eastman Chemical currently has a consensus price target of $71.7222, indicating a potential upside of 2.18%. Southern Copper has a consensus price target of $36.5714, indicating a potential downside of 12.21%. Given Eastman Chemical's stronger consensus rating and higher probable upside, equities analysts plainly believe Eastman Chemical is more favorable than Southern Copper.
Dividends
Eastman Chemical pays an annual dividend of $2.64 per share and has a dividend yield of 3.8%. Southern Copper pays an annual dividend of $0.80 per share and has a dividend yield of 1.9%. Eastman Chemical pays out 37.0% of its earnings in the form of a dividend. Southern Copper pays out 41.7% 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. Eastman Chemical has increased its dividend for 8 consecutive years and Southern Copper has increased its dividend for 3 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Eastman Chemical beats Southern Copper on 11 of the 17 factors compared between the two stocks.
