Analyzing Methanex (NASDAQ:MEOH) & Tokuyama (OTCMKTS:TKYMY)

Tokuyama (OTCMKTS:TKYMY) and Methanex (NASDAQ:MEOH) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.

Risk & Volatility

Tokuyama has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500. Comparatively, Methanex has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Earnings and Valuation

This table compares Tokuyama and Methanex”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tokuyama	$2.25 billion	0.83	$154.35 million	$1.17	11.09
Methanex	$3.59 billion	1.07	$163.99 million	$2.95	16.89

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

Profitability

This table compares Tokuyama and Methanex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tokuyama	7.42%	9.05%	5.00%
Methanex	2.21%	5.33%	2.02%

Institutional and Insider Ownership

73.5% of Methanex shares are owned by institutional investors. 1.0% of Methanex shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Tokuyama pays an annual dividend of $0.26 per share and has a dividend yield of 2.0%. Methanex pays an annual dividend of $0.74 per share and has a dividend yield of 1.5%. Tokuyama pays out 22.2% of its earnings in the form of a dividend. Methanex pays out 25.1% 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. Methanex has increased its dividend for 4 consecutive years. Tokuyama is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for Tokuyama and Methanex, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tokuyama	0	0	0	0	0.00
Methanex	0	5	6	1	2.67

Methanex has a consensus price target of $48.70, suggesting a potential downside of 2.27%. Given Methanex’s stronger consensus rating and higher possible upside, analysts clearly believe Methanex is more favorable than Tokuyama.

Summary

Methanex beats Tokuyama on 13 of the 18 factors compared between the two stocks.

About Tokuyama

Tokuyama Corporation produces and sells various chemical products in Japan. The company operates through six segments: Chemicals, Cement, Electronics and Advanced Materials, Life Science, Eco Business, and Others. The Chemicals segment offers caustic soda, soda ash, calcium chloride, sodium silicate cullet, sodium bicarbonate, purified, vinyl chloride monomer, polyvinyl chloride resin, propylene oxide, methylene chloride, and chloroform. The Cement segment provides cement, ready-mixed concrete, and cement-type stabilizer, as well as engages in the resource recycling business. The Electronic and Advanced Materials segment provides polycrystalline silicon; fumed silica and tetrachlorosilane; aluminum nitride; high-purity chemicals for electronics manufacturing and photoresist developer; and isopropyl alcohol. The Life Science segment provides medical diagnosis systems, dental materials and equipment, pharmaceutical ingredients and intermediates, plastic lens-related materials for glasses, and microporous film. The Eco Business segment offers plastic window sashes, ion exchange membranes, as well as engages in waste gypsum board recycling activity. The company was formerly known as Tokuyama Soda Co., Ltd. and changed its name to Tokuyama Corporation in April 1994. Tokuyama Corporation was incorporated in 1918 and is headquartered in Tokyo, Japan.

About Methanex

Methanex Corporation produces and supplies methanol in China, Europe, the United States, South America, South Korea, Canada, and Asia. The company also purchases methanol produced by others under methanol offtake contracts and on the spot market. In addition, it owns and leases storage and terminal facilities. The company owns and manages a fleet of approximately 30 ocean-going vessels. It serves chemical and petrochemical producers. Methanex Corporation was incorporated in 1968 and is headquartered in Vancouver, Canada.