Cabot (NYSE:CBT) vs. Air Products and Chemicals (NYSE:APD) Head to Head Review

Air Products and Chemicals (NYSE:APD) and Cabot (NYSE:CBT) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Risk & Volatility

Air Products and Chemicals has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, Cabot has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500.

Earnings & Valuation

This table compares Air Products and Chemicals and Cabot”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air Products and Chemicals	$12.10 billion	4.73	$3.83 billion	$6.95	37.02
Cabot	$3.99 billion	0.92	$380.00 million	$7.65	9.05

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

Dividends

Air Products and Chemicals pays an annual dividend of $7.16 per share and has a dividend yield of 2.8%. Cabot pays an annual dividend of $1.80 per share and has a dividend yield of 2.6%. Air Products and Chemicals pays out 103.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cabot pays out 23.5% of its earnings in the form of a dividend. Air Products and Chemicals has increased its dividend for 50 consecutive years and Cabot has increased its dividend for 14 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Air Products and Chemicals and Cabot’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Air Products and Chemicals	12.86%	15.11%	6.79%
Cabot	11.14%	25.68%	10.92%

Insider and Institutional Ownership

81.7% of Air Products and Chemicals shares are held by institutional investors. Comparatively, 93.2% of Cabot shares are held by institutional investors. 0.4% of Air Products and Chemicals shares are held by insiders. Comparatively, 3.0% of Cabot shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Air Products and Chemicals and Cabot, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Air Products and Chemicals	1	5	8	1	2.60
Cabot	1	2	1	0	2.00

Air Products and Chemicals currently has a consensus price target of $330.00, suggesting a potential upside of 28.26%. Cabot has a consensus price target of $85.00, suggesting a potential upside of 22.81%. Given Air Products and Chemicals’ stronger consensus rating and higher probable upside, research analysts clearly believe Air Products and Chemicals is more favorable than Cabot.

Summary

Air Products and Chemicals beats Cabot on 11 of the 18 factors compared between the two stocks.

About Air Products and Chemicals

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.

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.