Analyzing Linde (NASDAQ:LIN) and Toray Industries (OTCMKTS:TRYIY)

Linde (NASDAQ:LIN) and Toray Industries (OTCMKTS:TRYIY) are both large-cap basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, dividends, institutional ownership, risk and earnings.

Insider and Institutional Ownership

82.8% of Linde shares are owned by institutional investors. 0.3% of Linde shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Linde has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Toray Industries has a beta of 0.49, meaning that its share price is 51% less volatile than the S&P 500.

Profitability

This table compares Linde and Toray Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Linde	20.44%	19.80%	9.17%
Toray Industries	3.06%	4.25%	2.30%

Earnings & Valuation

This table compares Linde and Toray Industries”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Linde	$33.99 billion	7.01	$6.90 billion	$15.06	34.19
Toray Industries	$17.17 billion	0.63	$528.26 million	$0.70	20.51

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Linde and Toray Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Linde	0	1	10	1	3.00
Toray Industries	0	2	0	1	2.67

Linde currently has a consensus target price of $540.00, indicating a potential upside of 4.86%. Given Linde’s stronger consensus rating and higher probable upside, equities analysts plainly believe Linde is more favorable than Toray Industries.

Dividends

Linde pays an annual dividend of $6.40 per share and has a dividend yield of 1.2%. Toray Industries pays an annual dividend of $0.15 per share and has a dividend yield of 1.0%. Linde pays out 42.5% of its earnings in the form of a dividend. Toray Industries pays out 21.4% 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. Linde has raised its dividend for 5 consecutive years. Linde is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Linde beats Toray Industries on 16 of the 17 factors compared between the two stocks.

About Linde

Linde plc operates as an industrial gas company in the Americas, Europe, the Middle East, Africa, Asia, and South Pacific. It offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The company also designs and constructs turnkey process plants for third-party customers, as well as for the gas businesses in various locations, such as air separation, hydrogen, synthesis, olefin, and natural gas plants. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company was founded in 1879 and is based in Woking, the United Kingdom.

About Toray Industries

Toray Industries, Inc., together with its subsidiaries, manufactures, processes, and sells fibers and textiles, performance chemicals, carbon fiber composite materials, environment and engineering products, and life science products in Japan, China, North America, Europe, and internationally. The company offers filament yarns, staple fibers, and spun yarns, as well as woven and knitted fabrics of nylon, polyester, acrylics, and others; non-woven fabrics; ultra-fine fibers; and apparel products. It also provides nylon, ABS, PBT, PPS, and other resins and molded products; polyolefin foam products; polyester, polyethylene, polypropylene, and other films; processed film products; raw materials for synthetic fibers and other plastics; fine chemicals; electronic and information materials; and graphic materials. In addition, the company offers carbon fibers, carbon fiber composite materials, and molded products; analysis, physical evaluation, research, and other services; and pharmaceuticals, medical devices, etc. Further, it provides engineering services; condominiums; industrial equipment and machinery; IT-related equipment; water treatment membranes and related equipment; and materials for housing, building, and civil engineering applications. The company was formerly known as Toyo Rayon Co., Ltd. and changed its name to Toray Industries, Inc. in 1970. The company was incorporated in 1926 and is headquartered in Tokyo, Japan.