Praxair (NYSE: PX) and Westlake Chemical Corporation (NYSE:WLK) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.
Volatility and Risk
Praxair has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Westlake Chemical Corporation has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500.
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This is a breakdown of recent ratings and target prices for Praxair and Westlake Chemical Corporation, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Westlake Chemical Corporation||0||3||6||0||2.67|
Praxair presently has a consensus price target of $133.56, indicating a potential upside of 4.80%. Westlake Chemical Corporation has a consensus price target of $64.71, indicating a potential downside of 6.67%. Given Praxair’s higher probable upside, equities analysts plainly believe Praxair is more favorable than Westlake Chemical Corporation.
Earnings and Valuation
This table compares Praxair and Westlake Chemical Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Praxair||$10.92 billion||3.34||$3.54 billion||$5.35||23.82|
|Westlake Chemical Corporation||$6.94 billion||1.29||$1.33 billion||$3.50||19.81|
Praxair has higher revenue and earnings than Westlake Chemical Corporation. Westlake Chemical Corporation is trading at a lower price-to-earnings ratio than Praxair, indicating that it is currently the more affordable of the two stocks.
This table compares Praxair and Westlake Chemical Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Westlake Chemical Corporation||6.57%||13.68%||5.03%|
Praxair pays an annual dividend of $3.15 per share and has a dividend yield of 2.5%. Westlake Chemical Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 1.1%. Praxair pays out 58.9% of its earnings in the form of a dividend. Westlake Chemical Corporation pays out 21.7% 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. Praxair has raised its dividend for 13 consecutive years and Westlake Chemical Corporation has raised its dividend for 12 consecutive years. Praxair is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
85.5% of Praxair shares are held by institutional investors. Comparatively, 29.9% of Westlake Chemical Corporation shares are held by institutional investors. 0.2% of Praxair shares are held by company insiders. Comparatively, 71.7% of Westlake Chemical Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Praxair beats Westlake Chemical Corporation on 12 of the 17 factors compared between the two stocks.
Praxair, Inc. is an industrial gas company. The Company’s operations are organized into five segments, four of which have been determined on a geographic basis of segmentation: North America, Europe, South America and Asia. In addition, it operates its surface technologies business through its subsidiary, Praxair Surface Technologies, Inc., which represents the fifth segment. Its operations consist of two product lines: industrial gases and surface technologies. Its industrial gases product line centers on the manufacturing and distribution of atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases). It also designs, engineers and builds equipment that produces industrial gases primarily for internal use. Its Surface Technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.
About Westlake Chemical Corporation
Westlake Chemical Corporation is a global manufacturer and marketer of basic chemicals, vinyls, polymers and building products. The Company’s products include a range of chemicals, which are fundamental to various consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, water treatment, refrigerants, residential and commercial construction, as well as other durable and non-durable goods. Its segments include Olefins and Vinyls. It manufactures ethylene (through Westlake Chemical OpCo LP (OpCo)), polyethylene, styrene and associated co-products at its manufacturing facility in Lake Charles and polyethylene at its Longview facility. The Company’s products in its Vinyls segment include polyvinyl chloride (PVC), vinyl chloride monomer (VCM), ethylene dichloride (EDC), chlor-alkali (chlorine and caustic soda) and chlorinated derivative products and, through OpCo, ethylene. It also manufactures and sells building products fabricated from PVC.
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