Valvoline (NYSE: VVV) and Cabot (NYSE:CBT) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, profitability and dividends.
Valvoline pays an annual dividend of $0.30 per share and has a dividend yield of 1.2%. Cabot pays an annual dividend of $1.26 per share and has a dividend yield of 1.9%. Valvoline pays out 20.1% of its earnings in the form of a dividend. Cabot pays out 33.1% 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. Valvoline has increased its dividend for 6 consecutive years.
Risk and Volatility
Valvoline has a beta of 1.59, suggesting that its stock price is 59% more volatile than the S&P 500. Comparatively, Cabot has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.
This is a summary of current recommendations for Valvoline and Cabot, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Valvoline currently has a consensus price target of $25.71, indicating a potential upside of 3.10%. Cabot has a consensus price target of $66.40, indicating a potential downside of 1.25%. Given Valvoline’s higher possible upside, analysts plainly believe Valvoline is more favorable than Cabot.
Earnings and Valuation
This table compares Valvoline and Cabot’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Valvoline||$2.08 billion||2.42||$304.00 million||$1.49||16.74|
|Cabot||$2.72 billion||1.53||$241.00 million||$3.81||17.65|
Valvoline has higher earnings, but lower revenue than Cabot. Valvoline is trading at a lower price-to-earnings ratio than Cabot, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
92.4% of Valvoline shares are held by institutional investors. Comparatively, 84.8% of Cabot shares are held by institutional investors. 0.1% of Valvoline shares are held by company insiders. Comparatively, 2.5% of Cabot shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This table compares Valvoline and Cabot’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valvoline beats Cabot on 10 of the 17 factors compared between the two stocks.
Valvoline Inc. (Valvoline) is engaged in the production and distribution of automotive, commercial and industrial lubricants, and automotive chemicals. The Company operates through three segments: Core North America, Quick Lubes and International. The Core North America segment sells Valvoline, and other branded and private label products in the United States and Canada to both consumers performing their own automotive maintenance, referred to as Do-It-Yourself (DIY) consumers, as well as, to installer customers using Valvoline products to service vehicles owned by Do-It-For-Me (DIFM) consumers. Its Quick Lubes segment services the passenger car and light truck quick lube market through platforms, including its franchised Valvoline Instant Oil Change (VIOC) stores and Express Care. Its International segment sells Valvoline and other branded products through its affiliates, joint ventures, licensees and independent distributors. Its products include All Climate, DuraBlend and MaxLife.
Cabot Corporation is a global specialty chemicals and performance materials company. The Company operates through four business segments: reinforcement materials, performance chemicals, purification solutions and specialty fluids. Reinforcement materials’ rubber grade carbon blacks are used to enhance the physical properties of the systems and applications in which they are incorporated. Its rubber blacks products are used in tires and industrial products. Performance Chemicals consists of two businesses: specialty carbons and formulations business, and metal oxides business. Purification Solutions’ activated carbon products are used for the purification of water, air and pharmaceuticals, among others, as either a colorant or a decolorizing agent in the production of food and beverage applications. Its specialty fluids segment produces and markets cesium formate as a drilling and completion fluid for use in high pressure and high temperature oil and gas well construction.
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