Financial Contrast: Stepan (NYSE:SCL) & Mitsubishi Chemical (OTCMKTS:MTLHY)

Stepan (NYSE:SCL) and Mitsubishi Chemical (OTCMKTS:MTLHY) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, risk, earnings, analyst recommendations and valuation.

Institutional and Insider Ownership

82.7% of Stepan shares are owned by institutional investors. 6.6% of Stepan shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Stepan and Mitsubishi Chemical, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Stepan	2	0	0	0	1.00
Mitsubishi Chemical	0	0	0	0	0.00

Dividends

Stepan pays an annual dividend of $1.58 per share and has a dividend yield of 2.9%. Mitsubishi Chemical pays an annual dividend of $0.66 per share and has a dividend yield of 1.9%. Stepan pays out -254.8% of its earnings in the form of a dividend. Mitsubishi Chemical pays out 108.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Stepan has increased its dividend for 57 consecutive years. Stepan is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Stepan has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, Mitsubishi Chemical has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Valuation & Earnings

This table compares Stepan and Mitsubishi Chemical”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Stepan	$2.33 billion	0.54	$46.90 million	($0.62)	-88.72
Mitsubishi Chemical	$24.61 billion	0.41	$439.53 million	$0.61	56.89

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

Profitability

This table compares Stepan and Mitsubishi Chemical’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Stepan	-0.61%	2.65%	1.37%
Mitsubishi Chemical	N/A	N/A	N/A

Summary

Stepan beats Mitsubishi Chemical on 10 of the 15 factors compared between the two stocks.

About Stepan

Stepan Company, together with its subsidiaries, produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products worldwide. It operates through three segments: Surfactants, Polymers, and Specialty Products. The Surfactants segment offers surfactants that are used in consumer and industrial cleaning and disinfection products, including detergents for washing clothes, dishes, carpets, and floors and walls, as well as shampoos and body washes; and other applications, such as fabric softeners, germicidal quaternary compounds, disinfectants, and lubricating ingredients. Its surfactants are also used in various applications, including emulsifiers for spreading agricultural products; and industrial applications comprising latex systems, plastics, and composites. The Polymers segment provides polyurethane polyols that are used in the manufacture of rigid foam for thermal insulation in the construction industry, as well as a base raw material for coatings, adhesives, sealants, and elastomers (CASE); polyester resins, including liquid and powdered products, which are used in CASE applications; and phthalic anhydride that is used in unsaturated polyester resins, alkyd resins, and plasticizers for applications in construction materials, as well as components of automotive, boating, and other consumer products. The Specialty Products segment offers flavors, emulsifiers, and solubilizers for use in food, flavoring, nutritional supplement, and pharmaceutical applications. Stepan Company was founded in 1932 and is headquartered in Northbrook, Illinois.

About Mitsubishi Chemical

Mitsubishi Chemical Group Corporation provides performance products, chemicals, industrial gases, health care products, and other products in Japan and internationally. It operates in five segments: Specialty Materials, Industrial Gases, Health Care, MMA, and Basic Materials. The Specialty Materials segment offers performance polymers, soarnol, gohsenol, sustainable polymers, and engineering plastics; coating materials, additives, and fines; packaging, industrial and medical, acetyl, and polyester films; engineering shapes and solutions, carbon fiber and composite materials, and fibers; aqua, life, and infrastructure solutions; and semiconductor, electronics, and battery materials. The Industrial Gases segment provides industrial gases. The Health Care segment offers ethical pharmaceuticals. The MMA segment provides methyl methacrylate (MMA) and polymethyl methacrylate (PMMA). The Basic Materials segment offers basic petrochemicals, polyolefins, and basic chemical derivatives, as well as carbon products. The company provides engineering, transportation, and warehousing services. Mitsubishi Chemical Group Corporation was incorporated in 2005 and is headquartered in Tokyo, Japan.