Head to Head Survey: Trinseo (TSE) versus Orion Engineered Carbons (OEC)

Trinseo (NYSE: TSE) and Orion Engineered Carbons (NYSE:OEC) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, profitability, earnings, analyst recommendations and dividends.

Insider & Institutional Ownership

96.9% of Trinseo shares are held by institutional investors. Comparatively, 54.6% of Orion Engineered Carbons shares are held by institutional investors. 0.3% of Trinseo shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Trinseo and Orion Engineered Carbons’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Trinseo 6.78% 65.80% 13.58%
Orion Engineered Carbons 5.50% 137.36% 8.91%

Earnings and Valuation

This table compares Trinseo and Orion Engineered Carbons’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Trinseo $3.72 billion 0.92 $318.31 million $6.38 12.31
Orion Engineered Carbons $1.14 billion 1.40 $49.38 million $1.27 21.26

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

Analyst Recommendations

This is a summary of current ratings and price targets for Trinseo and Orion Engineered Carbons, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Trinseo 0 2 3 0 2.60
Orion Engineered Carbons 0 1 4 0 2.80

Trinseo presently has a consensus target price of $76.25, suggesting a potential downside of 2.93%. Orion Engineered Carbons has a consensus target price of $25.40, suggesting a potential downside of 5.93%. Given Trinseo’s higher probable upside, analysts clearly believe Trinseo is more favorable than Orion Engineered Carbons.

Dividends

Trinseo pays an annual dividend of $1.44 per share and has a dividend yield of 1.8%. Orion Engineered Carbons pays an annual dividend of $0.80 per share and has a dividend yield of 3.0%. Trinseo pays out 22.6% of its earnings in the form of a dividend. Orion Engineered Carbons pays out 63.0% 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.

Risk and Volatility

Trinseo has a beta of 2.32, meaning that its stock price is 132% more volatile than the S&P 500. Comparatively, Orion Engineered Carbons has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500.

Summary

Trinseo beats Orion Engineered Carbons on 10 of the 16 factors compared between the two stocks.

About Trinseo

Trinseo S.A. is a materials company engaged in the manufacture and marketing of synthetic rubber, latex and plastics. The Company’s segments include Latex Binders, Synthetic Rubber, Performance Plastics, Basic Plastics, Feedstocks and Americas Styrenics. The Latex Binders segment produces styrene-butadiene latex (SB latex) and other latex polymers and binders. The Synthetic Rubber segment produces synthetic rubber products used in tires, impact modifiers and technical rubber products. The Performance Plastics segment produces compounds and blends and specialized acrylonitrile-butadiene-styrene (ABS) grades. The Basic Plastics segment produces styrenic polymers, including polystyrene, basic ABS, and styrene-acrylonitrile (SAN) products, as well as polycarbonate (PC). The Feedstocks segment includes its production and procurement of styrene monomer outside of North America. The Americas Styrenics segment consists of the operations of its joint venture, Americas Styrenics LLC.

About Orion Engineered Carbons

Orion Engineered Carbons S.A. is a producer of carbon black. The Company operates through two segments: Specialty Carbon Black and Rubber Carbon Black. The Specialty Carbon Black segment is engaged in the production of specialty carbon black. The Rubber Carbon Black segment is involved in the production of rubber carbon black. As of December 31, 2016, it operated a diversified carbon black business with over 280 specialty carbon black grades and approximately 80 rubber carbon black grades. Carbon black is used as a pigment and as a performance additive in coatings, polymers, printing and special applications (specialty carbon black), and in the reinforcement of rubber in tires and mechanical rubber goods (rubber carbon black). As of December 31, 2016, it operated a global platform of 13 production facilities in Europe, North and South America, Asia and South Africa and three sales companies, as well as one jointly-owned production plant in Germany.

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