Quaker Houghton (NYSE:KWR) versus PPG Industries (NYSE:PPG) Financial Analysis

Quaker Houghton (NYSE:KWR) and PPG Industries (NYSE:PPG) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.

Valuation and Earnings

This table compares Quaker Houghton and PPG Industries”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Quaker Houghton	$1.84 billion	1.26	$116.64 million	($0.43)	-310.78
PPG Industries	$15.85 billion	1.47	$1.12 billion	$4.41	23.45

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

Profitability

This table compares Quaker Houghton and PPG Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Quaker Houghton	-0.39%	8.35%	4.25%
PPG Industries	6.25%	23.85%	8.40%

Insider & Institutional Ownership

77.5% of Quaker Houghton shares are held by institutional investors. Comparatively, 81.9% of PPG Industries shares are held by institutional investors. 1.1% of Quaker Houghton shares are held by insiders. Comparatively, 0.3% of PPG Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Quaker Houghton has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, PPG Industries has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500.

Dividends

Quaker Houghton pays an annual dividend of $2.03 per share and has a dividend yield of 1.5%. PPG Industries pays an annual dividend of $2.84 per share and has a dividend yield of 2.7%. Quaker Houghton pays out -472.1% of its earnings in the form of a dividend. PPG Industries pays out 64.4% 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. Quaker Houghton has increased its dividend for 17 consecutive years and PPG Industries has increased its dividend for 54 consecutive years. PPG Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Quaker Houghton and PPG Industries, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Quaker Houghton	2	1	3	0	2.17
PPG Industries	0	8	6	1	2.53

Quaker Houghton presently has a consensus price target of $150.75, suggesting a potential upside of 12.81%. PPG Industries has a consensus price target of $125.00, suggesting a potential upside of 20.86%. Given PPG Industries’ stronger consensus rating and higher possible upside, analysts plainly believe PPG Industries is more favorable than Quaker Houghton.

Summary

PPG Industries beats Quaker Houghton on 15 of the 18 factors compared between the two stocks.

About Quaker Houghton

Quaker Chemical Corporation, together with its subsidiaries, develops, produces, and markets various formulated specialty chemical products for a range of heavy industrial and manufacturing applications in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It offers metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die-cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, specialty greases, offshore sub-sea energy control fluids, rolling lubricants, rod and wire drawing fluids, and surface treatment chemicals. The company also provides chemical management services. It serves steel, aluminum, automotive, aerospace, offshore, container, mining, and metalworking companies. The company was founded in 1918 and is headquartered in Conshohocken, Pennsylvania.

About PPG Industries

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. It operates through two segments, Performance Coatings and Industrial Coatings. The Performance Coatings segment offers coatings, solvents, adhesives, sealants, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors; and coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, kitchenware, and transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers' licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes. PPG Industries, Inc. was incorporated in 1883 and is headquartered in Pittsburgh, Pennsylvania.