Northern Technologies International (NASDAQ:NTIC) and Cabot (NYSE:CBT) Critical Review

Northern Technologies International (NASDAQ:NTIC) and Cabot (NYSE:CBT) are both materials companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, dividends, profitability, earnings and risk.

Insider and Institutional Ownership

32.9% of Northern Technologies International shares are owned by institutional investors. Comparatively, 93.2% of Cabot shares are owned by institutional investors. 24.9% of Northern Technologies International shares are owned by company insiders. Comparatively, 3.1% of Cabot shares are owned by company 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.

Volatility and Risk

Northern Technologies International has a beta of 0.15, indicating that its share price is 85% less volatile than the S&P 500. Comparatively, Cabot has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500.

Dividends

Northern Technologies International pays an annual dividend of $0.04 per share and has a dividend yield of 0.5%. Cabot pays an annual dividend of $1.89 per share and has a dividend yield of 2.5%. Northern Technologies International pays out -33.3% of its earnings in the form of a dividend. Cabot pays out 53.2% 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. Cabot has increased its dividend for 14 consecutive years. Cabot is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Northern Technologies International and Cabot’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northern Technologies International	-1.26%	-0.45%	-0.33%
Cabot	5.23%	20.29%	9.01%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Northern Technologies International and Cabot, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northern Technologies International	1	1	0	0	1.50
Cabot	1	4	2	0	2.14

Cabot has a consensus target price of $87.80, suggesting a potential upside of 13.96%. Given Cabot’s stronger consensus rating and higher possible upside, analysts clearly believe Cabot is more favorable than Northern Technologies International.

Valuation and Earnings

This table compares Northern Technologies International and Cabot”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northern Technologies International	$91.84 million	0.81	$20,000.00	($0.12)	-65.00
Cabot	$3.71 billion	1.07	$331.00 million	$3.55	21.70

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

Summary

Cabot beats Northern Technologies International on 15 of the 17 factors compared between the two stocks.

About Northern Technologies International

Northern Technologies International Corporation develops and markets rust and corrosion inhibiting solutions in North America, South America, Europe, Asia, the Middle East and internationally. It offers rust and corrosion inhibiting products, such as plastic and paper packaging, liquids, coatings, rust removers, cleaners, diffusers, and engineered solutions designed for the oil and gas industry under the ZERUST brand. The company provides a portfolio of bio-based and certified compostable polymer resin compounds and finished products under the Natur-Tec brand. In addition, it offers on-site and technical consulting for rust and corrosion prevention issues. It sells its products and services to automotive, electronics, electrical, mechanical, military, retail consumer, and oil and gas markets through direct sales force, network of independent distributors, agents, manufacturer's sales representatives, and strategic partners. The company was founded in 1970 and is headquartered in Circle Pines, Minnesota.

About Cabot

Cabot Corporation operates as a specialty chemicals and performance materials company. The company operates through two segments, Reinforcement Materials and Performance Chemicals. It offers reinforcing carbons that are used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites solutions. The company also provides specialty carbons for use in inks, coatings, plastics, adhesives, toners, batteries, and displays; conductive additives and fumed alumina used in lead acid and lithium-ion batteries for electric vehicles; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; and fumed alumina for use in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries. In addition, it offers aerogel, a hydrophobic, silica-based particle to use in various thermal insulation and specialty chemical applications; masterbatch and conductive compound products that are used in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; and inkjet colorants for inkjet printing applications. The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.