Critical Comparison: Quaker Houghton (NYSE:KWR) and Air Products and Chemicals (NYSE:APD)

Quaker Houghton (NYSE:KWR) and Air Products and Chemicals (NYSE:APD) are both materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, risk, profitability and valuation.

Earnings and Valuation

This table compares Quaker Houghton and Air Products and Chemicals”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quaker Houghton	$1.89 billion	1.43	-$2.49 million	$5.61	28.00
Air Products and Chemicals	$12.04 billion	5.54	-$394.50 million	($0.22)	-1,359.98

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Quaker Houghton	4.94%	9.55%	4.66%
Air Products and Chemicals	-0.38%	16.87%	7.18%

Dividends

Quaker Houghton pays an annual dividend of $2.03 per share and has a dividend yield of 1.3%. Air Products and Chemicals pays an annual dividend of $7.24 per share and has a dividend yield of 2.4%. Quaker Houghton pays out 36.2% of its earnings in the form of a dividend. Air Products and Chemicals pays out -3,290.9% 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. Quaker Houghton has raised its dividend for 17 consecutive years and Air Products and Chemicals has raised its dividend for 43 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

77.5% of Quaker Houghton shares are held by institutional investors. Comparatively, 81.7% of Air Products and Chemicals shares are held by institutional investors. 1.0% of Quaker Houghton shares are held by company insiders. Comparatively, 1.9% of Air Products and Chemicals shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Quaker Houghton has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500. Comparatively, Air Products and Chemicals has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaker Houghton	0	1	4	1	3.00
Air Products and Chemicals	0	7	10	2	2.74

Quaker Houghton currently has a consensus target price of $188.00, indicating a potential upside of 19.69%. Air Products and Chemicals has a consensus target price of $333.88, indicating a potential upside of 11.59%. Given Quaker Houghton’s stronger consensus rating and higher probable upside, research analysts plainly believe Quaker Houghton is more favorable than Air Products and Chemicals.

Summary

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

About Quaker Houghton

Quaker Chemical Corporation, together with its subsidiaries, develops, produces, and markets various formulated specialty chemical products for a range of heavy industrial and manufacturing applications in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die-cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, specialty greases, offshore sub-sea energy control fluids, rolling lubricants, rod and wire drawing fluids, and surface treatment chemicals. The company also provides chemical management services. It serves steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. The company was founded in 1918 and is headquartered in Conshohocken, Pennsylvania.

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.