Renewable Energy Group (NASDAQ: REGI) and Westlake Chemical (NYSE:WLKP) are both small-cap oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.
Westlake Chemical pays an annual dividend of $1.59 per share and has a dividend yield of 7.1%. Renewable Energy Group does not pay a dividend. Westlake Chemical pays out 92.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westlake Chemical has raised its dividend for 3 consecutive years.
This is a breakdown of recent ratings and target prices for Renewable Energy Group and Westlake Chemical, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Renewable Energy Group||0||1||2||0||2.67|
Renewable Energy Group presently has a consensus price target of $16.67, indicating a potential upside of 0.10%. Westlake Chemical has a consensus price target of $26.63, indicating a potential upside of 18.33%. Given Westlake Chemical’s higher probable upside, analysts plainly believe Westlake Chemical is more favorable than Renewable Energy Group.
Volatility and Risk
Renewable Energy Group has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Westlake Chemical has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.
This table compares Renewable Energy Group and Westlake Chemical’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Renewable Energy Group||6.23%||29.89%||16.15%|
Valuation & Earnings
This table compares Renewable Energy Group and Westlake Chemical’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Renewable Energy Group||$2.16 billion||0.29||-$79.07 million||($2.04)||-8.16|
|Westlake Chemical||$1.17 billion||0.62||$48.67 million||$1.72||13.08|
Westlake Chemical has lower revenue, but higher earnings than Renewable Energy Group. Renewable Energy Group is trading at a lower price-to-earnings ratio than Westlake Chemical, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
49.4% of Westlake Chemical shares are held by institutional investors. 2.0% of Renewable Energy Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Westlake Chemical beats Renewable Energy Group on 10 of the 17 factors compared between the two stocks.
Renewable Energy Group Company Profile
Renewable Energy Group, Inc. produces and sells biofuels and renewable chemicals in North America. The company operates through Biomass-Based Diesel, Services, Renewable Chemicals, and Corporate and Other segments. It acquires feedstock; and manages construction and operates biomass-based diesel production facilities. The company also produces biomass-based diesel from a range of feedstocks, including inedible corn oil, used cooking oil, and inedible animal fat, as well as soybean or canola oil; and markets, distributes, and sells biomass-based diesel and its co-products. In addition, it is involved in the purchase and resale of biomass-based diesel, petroleum-based diesel, renewable identification numbers, California Low Carbon Fuel Standard credits, and raw material feedstocks acquired from third parties; and sale of glycerin, free fatty acids, naphtha, and other co-products of the biomass-based diesel production process. Further, the company provides facility management and operational services to biomass-based diesel production facilities, as well as to other clean-tech companies; and construction management services for biomass-based diesel production facilities. Additionally, it engages in the production of renewable chemicals, advanced biofuels, and other products; and trading of petroleum-based heating oil and diesel fuel. Renewable Energy Group, Inc. was founded in 1996 and is headquartered in Ames, Iowa.
Westlake Chemical Company Profile
Westlake Chemical Partners LP operates, acquires, and develops ethylene production facilities and related assets in the United States. The company operates ethylene production facilities, which primarily convert ethane into ethylene. It also sells ethylene co-products, including propylene, crude butadiene, pyrolysis gasoline, and hydrogen directly to third parties on a spot or contract basis. Westlake Chemical Partners GP LLC serves as the general partner of the company. The company was founded in 2014 and is headquartered in Houston, Texas.
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