Financial Analysis: Olin (NYSE:OLN) and Arkema (OTCMKTS:ARKAY)

Olin (NYSE:OLN) and Arkema (OTCMKTS:ARKAY) are both mid-cap basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, valuation, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for Olin and Arkema, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Olin	2	10	3	1	2.19
Arkema	2	6	1	0	1.89

Olin presently has a consensus target price of $28.08, suggesting a potential upside of 16.70%. Given Olin’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Olin is more favorable than Arkema.

Valuation and Earnings

This table compares Olin and Arkema”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Olin	$6.78 billion	0.40	-$100.50 million	($1.12)	-21.48
Arkema	$10.26 billion	0.50	$71.28 million	$0.25	267.21

Arkema has higher revenue and earnings than Olin. Olin is trading at a lower price-to-earnings ratio than Arkema, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Olin and Arkema’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Olin	-1.89%	-4.68%	-1.18%
Arkema	0.46%	4.06%	2.08%

Volatility & Risk

Olin has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Arkema has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Insider and Institutional Ownership

88.7% of Olin shares are owned by institutional investors. 1.6% of Olin shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Olin pays an annual dividend of $0.80 per share and has a dividend yield of 3.3%. Arkema pays an annual dividend of $3.15 per share and has a dividend yield of 4.7%. Olin pays out -71.4% of its earnings in the form of a dividend. Arkema pays out 1,260.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Arkema beats Olin on 9 of the 17 factors compared between the two stocks.

About Olin

Olin Corporation manufactures and distributes chemical products in the United States, Europe, Asia Pacific, Latin America, and Canada. It operates through three segments: Chlor Alkali Products and Vinyls; Epoxy; and Winchester. The Chlor Alkali Products and Vinyls segment offers chlorine and caustic soda, ethylene dichloride and vinyl chloride monomers, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, hydrochloric acid, hydrogen, bleach products, potassium hydroxide, and chlorinated organics intermediates and solvents. The Epoxy segment provides Allylics, such as allyl chloride, epichlorohydrin, and glycerin; aromatics, including acetone, bisphenol, cumene, and phenol; liquid and solid epoxy resins; and converted epoxy resins and additives. The Winchester segment offers sporting ammunition products, including shotshells, small caliber centerfire, and rimfire ammunition products for hunters and recreational shooters, and law enforcement agencies; small caliber military ammunition products for use in infantry and mounted weapons; and industrial products comprising gauge loads and powder-actuated tool loads for maintenance applications in power and concrete industries, and powder-actuated tools in construction industry. The company markets its products through its sales force, as well as directly to various industrial customers, mass merchants, retailers, wholesalers, gun clubs, other distributors, and the U.S. Government and its prime contractors. Olin Corporation was incorporated in 1892 and is based in Clayton, Missouri.

About Arkema

Arkema S.A. manufactures and sells specialty chemicals and advanced materials worldwide. The company operates in three segments: Adhesive Solutions, Advanced Materials and Coating Solutions, and Intermediates. The Adhesive Solutions segment provides solutions for construction, renovation of buildings, DIY, durable goods, and packaging and non-woven applications; and supplies technologies used in building activities for businesses and individuals, including sealants, tiles, flooring adhesives and waterproofing systems, and technologies used in industry, which include automotive, textiles, glazing, flexible and rigid packaging, and hygiene markets. This segment also offers performance polymers, such as specialty polyamides, PVDF, polyimides, fluorospecialties, and polyetherketoneketone; and performance additives which includes molecular sieves, organic peroxides, thiochemicals, and hydrogen peroxide. The Advance Materials and Coating Solutions segment offers coating solutions, including comprising EU/US acrylics and coating resins; coating additives, such as sartomer photocure resins and coatex rheology additives. This segment also provides decorative paints, industrial coatings, and adhesives; and solutions for applications in the paper, superabsorbent, water treatment and oil and gas extraction, and 3D printing and electronics industries. The Intermediates segment provides fluorogases and acrylics; and industrial intermediate chemicals used in construction, refrigeration and air conditioning, automotive, coatings, and water treatment sectors. Arkema S.A. was incorporated in 2003 and is headquartered in Colombes, France.