NL Industries (NYSE:NL) and Quaker Houghton (NYSE:KWR) Financial Comparison

Quaker Houghton (NYSE:KWR) and NL Industries (NYSE:NL) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Quaker Houghton and NL Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaker Houghton	2	0	3	0	2.20
NL Industries	1	0	0	0	1.00

Quaker Houghton currently has a consensus target price of $166.00, indicating a potential upside of 12.55%. Given Quaker Houghton’s stronger consensus rating and higher probable upside, analysts clearly believe Quaker Houghton is more favorable than NL Industries.

Valuation & Earnings

This table compares Quaker Houghton and NL Industries”s gross 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	1.36	-$2.49 million	$0.28	526.77
NL Industries	$158.30 million	1.85	-$37.83 million	($0.77)	-7.78

Quaker Houghton has higher revenue and earnings than NL Industries. NL Industries 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 NL Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quaker Houghton	0.22%	9.03%	4.39%
NL Industries	-21.56%	-8.74%	-7.02%

Insider & Institutional Ownership

77.5% of Quaker Houghton shares are owned by institutional investors. Comparatively, 10.7% of NL Industries shares are owned by institutional investors. 1.0% of Quaker Houghton shares are owned by insiders. Comparatively, 0.3% of NL Industries shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Quaker Houghton pays an annual dividend of $2.03 per share and has a dividend yield of 1.4%. NL Industries pays an annual dividend of $0.40 per share and has a dividend yield of 6.7%. Quaker Houghton pays out 725.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NL Industries pays out -51.9% of its earnings in the form of a dividend. Quaker Houghton has increased its dividend for 17 consecutive years and NL Industries has increased its dividend for 2 consecutive years. NL Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Quaker Houghton has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500. Comparatively, NL Industries has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500.

Summary

Quaker Houghton beats NL Industries on 14 of the 17 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 NL Industries

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in Europe, North America, the Asia Pacific, and internationally. The company manufactures and sells mechanical and electronic cabinet locks and other locking mechanisms, including disc tumbler locks; pin tumbler locking mechanisms under KeSet, System 64, TuBar, and Turbine brands; and electronic locks under CompX eLock and StealthLock brands for use in various applications, such as mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. It also offers original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, and other exhaust components; gauges, such as GPS speedometers and tachometers; mechanical and electronic controls and throttles; wake enhancement devices, trim tabs, steering wheels, and other billet aluminum accessories; dash panels, LED indicators, wire harnesses, and other accessories; and grab handles, pin cleats, and other accessories; primarily for performance and ski/wakeboard and performance boats. In addition, the company produces and markets value-added titanium dioxide pigments, a base industrial product used in imparting whiteness, brightness, opacity, and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals, and other industrial and consumer products. The company sells its component products directly to original equipment manufacturers, as well as through distributors. NL Industries, Inc. was founded in 1891 and is based in Dallas, Texas. NL Industries, Inc. operates as a subsidiary of Valhi, Inc.