Critical Analysis: H. B. Fuller (NYSE:FUL) versus LyondellBasell Industries (NYSE:LYB)

LyondellBasell Industries (NYSE:LYB) and H. B. Fuller (NYSE:FUL) are both materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Insider & Institutional Ownership

71.2% of LyondellBasell Industries shares are owned by institutional investors. Comparatively, 95.9% of H. B. Fuller shares are owned by institutional investors. 0.1% of LyondellBasell Industries shares are owned by insiders. Comparatively, 1.8% of H. B. Fuller shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for LyondellBasell Industries and H. B. Fuller, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LyondellBasell Industries	4	8	7	1	2.25
H. B. Fuller	0	2	3	2	3.00

LyondellBasell Industries currently has a consensus target price of $72.41, indicating a potential upside of 16.83%. H. B. Fuller has a consensus target price of $67.86, indicating a potential upside of 37.55%. Given H. B. Fuller’s stronger consensus rating and higher possible upside, analysts plainly believe H. B. Fuller is more favorable than LyondellBasell Industries.

Earnings & Valuation

This table compares LyondellBasell Industries and H. B. Fuller”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LyondellBasell Industries	$30.15 billion	0.66	-$738.00 million	($1.13)	-54.85
H. B. Fuller	$3.47 billion	0.76	$151.97 million	$3.26	15.13

H. B. Fuller has lower revenue, but higher earnings than LyondellBasell Industries. LyondellBasell Industries is trading at a lower price-to-earnings ratio than H. B. Fuller, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

LyondellBasell Industries has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, H. B. Fuller has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Profitability

This table compares LyondellBasell Industries and H. B. Fuller’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LyondellBasell Industries	-1.13%	17.44%	5.30%
H. B. Fuller	5.29%	12.18%	4.73%

Dividends

LyondellBasell Industries pays an annual dividend of $2.76 per share and has a dividend yield of 4.5%. H. B. Fuller pays an annual dividend of $0.98 per share and has a dividend yield of 2.0%. LyondellBasell Industries pays out -244.2% of its earnings in the form of a dividend. H. B. Fuller pays out 30.1% 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. LyondellBasell Industries has raised its dividend for 14 consecutive years and H. B. Fuller has raised its dividend for 57 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

H. B. Fuller beats LyondellBasell Industries on 12 of the 18 factors compared between the two stocks.

About LyondellBasell Industries

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and PolyolefinsAmericas; Olefins and PolyolefinsEurope, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyethylene, and polypropylene; and propylene oxide and derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol. In addition, the company produce and markets compounding and solutions including polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers including catalloy and polybutene-1; and refines heavy, high-sulfur crude oil and other crude oils, as well as refined products, including gasoline and distillates. Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications. LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.

About H. B. Fuller

H.B. Fuller Company, together with its subsidiaries, formulates, manufactures, and markets adhesives, sealants, coatings, polymers, tapes, encapsulants, additives, and other specialty chemical products. It operates through three segments: Hygiene, Health and Consumable Adhesives; Engineering Adhesives; and Construction Adhesives. The Hygiene, Health and Consumable Adhesives segment produces and supplies specialty industrial adhesives, such as thermoplastic, thermoset, reactive, water-based, and solvent-based products for applications in various markets, including packaging, converting, nonwoven and hygiene, and health and beauty. The Engineering Adhesives segment produces and supplies high performance industrial adhesives comprising reactive, light cure, two-part liquids, polyurethane, silicone, film, and fast cure products to the durable assembly, performance wood and textile, transportation, electronics, clean energy, aerospace and defense, appliance, heavy machinery, and insulating glass markets. The Construction Adhesives segment provides products used for tile setting, commercial roofing, heating, ventilation, and air conditioning and insulation applications, as well as caulks and sealants for the consumer market and professional trade. The company sells its products directly to customers, as well as through distributors and retailers in the Americas, Europe, India, the Middle East, Africa, and the Asia Pacific. H.B. Fuller Company was founded in 1887 and is headquartered in Saint Paul, Minnesota.