Tronox (NYSE:TROX) and Cabot (NYSE:CBT) Head to Head Analysis

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

Profitability

This table compares Cabot and Tronox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cabot	8.91%	24.55%	10.57%
Tronox	-11.39%	-8.10%	-2.23%

Institutional and Insider Ownership

93.2% of Cabot shares are owned by institutional investors. Comparatively, 73.4% of Tronox shares are owned by institutional investors. 3.0% of Cabot shares are owned by company insiders. Comparatively, 1.7% of Tronox shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for Cabot and Tronox, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cabot	2	1	3	0	2.17
Tronox	3	3	5	0	2.18

Cabot currently has a consensus price target of $74.00, suggesting a potential upside of 3.04%. Tronox has a consensus price target of $5.18, suggesting a potential downside of 2.70%. Given Cabot’s higher probable upside, equities analysts clearly believe Cabot is more favorable than Tronox.

Dividends

Cabot pays an annual dividend of $1.80 per share and has a dividend yield of 2.5%. Tronox pays an annual dividend of $0.20 per share and has a dividend yield of 3.8%. Cabot pays out 30.0% of its earnings in the form of a dividend. Tronox pays out -9.8% 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. Cabot has increased its dividend for 14 consecutive years. Tronox is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Cabot and Tronox”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cabot	$3.71 billion	1.02	$331.00 million	$6.01	11.95
Tronox	$2.84 billion	0.30	-$48.00 million	($2.05)	-2.60

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

Volatility & Risk

Cabot has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Tronox has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Summary

Cabot beats Tronox on 12 of the 17 factors compared between the two stocks.

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.

About Tronox

Tronox Holdings plc operates as a vertically integrated manufacturer of TiO2 pigment in North America, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates titanium-bearing mineral sand mines; and engages in beneficiation and smelting operations. It offers TiO2 pigment; ultrafine specialty TiO2; zircon; feedstock; pig iron; monazite; titanium tetrachloride; and other products. The company’s products are used for the manufacture of paints, coatings, plastics, and paper, as well as various other applications. Tronox Holdings plc is based in Stamford, Connecticut.