Head-To-Head Review: AdvanSix (NYSE:ASIX) versus Linde (NASDAQ:LIN)

Linde (NASDAQ:LIN) and AdvanSix (NYSE:ASIX) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Linde and AdvanSix, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Linde	0	2	8	2	3.00
AdvanSix	1	1	1	0	2.00

Linde currently has a consensus target price of $508.20, indicating a potential upside of 0.57%. AdvanSix has a consensus target price of $29.00, indicating a potential upside of 63.66%. Given AdvanSix’s higher possible upside, analysts plainly believe AdvanSix is more favorable than Linde.

Dividends

Linde pays an annual dividend of $6.00 per share and has a dividend yield of 1.2%. AdvanSix pays an annual dividend of $0.64 per share and has a dividend yield of 3.6%. Linde pays out 41.1% of its earnings in the form of a dividend. AdvanSix pays out 35.4% 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. Linde has raised its dividend for 5 consecutive years and AdvanSix has raised its dividend for 2 consecutive years. AdvanSix is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Linde and AdvanSix’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Linde	20.30%	19.52%	9.10%
AdvanSix	3.24%	6.97%	3.40%

Insider and Institutional Ownership

82.8% of Linde shares are held by institutional investors. Comparatively, 86.4% of AdvanSix shares are held by institutional investors. 0.7% of Linde shares are held by company insiders. Comparatively, 5.6% of AdvanSix 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.

Risk and Volatility

Linde has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, AdvanSix has a beta of 1.72, indicating that its share price is 72% more volatile than the S&P 500.

Valuation and Earnings

This table compares Linde and AdvanSix”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Linde	$33.99 billion	6.94	$6.90 billion	$14.59	34.63
AdvanSix	$1.52 billion	0.31	$49.29 million	$1.81	9.79

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

Summary

Linde beats AdvanSix on 12 of the 18 factors compared between the two stocks.

About Linde

Linde plc operates as an industrial gas company in the Americas, Europe, the Middle East, Africa, Asia, and South Pacific. It offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The company also designs and constructs turnkey process plants for third-party customers, as well as for the gas businesses in various locations, such as air separation, hydrogen, synthesis, olefin, and natural gas plants. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company was founded in 1879 and is based in Woking, the United Kingdom.

About AdvanSix

AdvanSix Inc. engages in the manufacture and sale of polymer resins in the United States and internationally. It offers Nylon 6, a polymer resin, which is a synthetic material used to produce fibers, filaments, engineered plastics, and films. The company also provides caprolactam to manufacture polymer resins; ammonium sulfate fertilizers to distributors, farm cooperatives, and retailers; and acetone that are used in the production of adhesives, paints, coatings, solvents, herbicides, and engineered plastic resins, as well as other intermediate chemicals, including phenol, monoisopropylamine, dipropylamine, monoallylamine, alpha-methylstyrene, cyclohexanone, methyl ethyl ketoxime, acetaldehyde oxime, 2-pentanone oxime, cyclohexanol, sulfuric acid, ammonia, and carbon dioxide. It offers its products under the Aegis, Capran, Sulf-N, Nadone, Naxol, and EZ-Blox brands. The company sells its products directly, as well as through distributors. AdvanSix Inc. was incorporated in 2016 and is headquartered in Parsippany, New Jersey.