Innophos Holdings (IPHS) & Eastman Chemical (EMN) Critical Review

Innophos Holdings (NASDAQ: IPHS) and Eastman Chemical (NYSE:EMN) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, valuation, analyst recommendations, dividends, earnings and profitability.

Earnings and Valuation

This table compares Innophos Holdings and Eastman Chemical’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Innophos Holdings $698.91 million 1.30 $116.47 million $2.28 20.59
Eastman Chemical $9.20 billion 1.35 $2.15 billion $6.32 13.58

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

Dividends

Innophos Holdings pays an annual dividend of $1.92 per share and has a dividend yield of 4.1%. Eastman Chemical pays an annual dividend of $2.04 per share and has a dividend yield of 2.4%. Innophos Holdings pays out 84.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eastman Chemical pays out 32.3% of its earnings in the form of a dividend. Eastman Chemical has increased its dividend for 5 consecutive years.

Profitability

This table compares Innophos Holdings and Eastman Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Innophos Holdings 6.46% 13.79% 7.51%
Eastman Chemical 10.11% 22.54% 6.74%

Insider & Institutional Ownership

94.2% of Innophos Holdings shares are owned by institutional investors. Comparatively, 82.1% of Eastman Chemical shares are owned by institutional investors. 2.3% of Innophos Holdings shares are owned by insiders. Comparatively, 1.1% of Eastman Chemical shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Innophos Holdings and Eastman Chemical, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Innophos Holdings 0 0 1 0 3.00
Eastman Chemical 0 4 5 0 2.56

Innophos Holdings currently has a consensus price target of $56.00, indicating a potential upside of 19.30%. Eastman Chemical has a consensus price target of $90.00, indicating a potential upside of 4.90%. Given Innophos Holdings’ stronger consensus rating and higher possible upside, research analysts plainly believe Innophos Holdings is more favorable than Eastman Chemical.

Risk and Volatility

Innophos Holdings has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Summary

Eastman Chemical beats Innophos Holdings on 10 of the 17 factors compared between the two stocks.

About Innophos Holdings

Innophos Holdings, Inc. is a producer of nutritional specialty ingredients with applications in food, beverage, dietary supplements, pharmaceutical, oral care and industrial end markets. The Company also provides bioactive mineral and nutritional ingredients. The Company’s segments include Specialty Phosphates US & Canada, Specialty Phosphates Mexico, and Granular Triple Super Phosphate (GTSP) & Other. The Company has four principal product lines: Specialty Ingredients; Food and Technical Grade Purified Phosphoric Acid (PPA); Technical Grade Sodium Tripolyphosphate (STPP), & Detergent Grade PPA, and GTSP & Other. The Company’s bioactive mineral ingredients are mineral-based ingredients for food, beverage and dietary supplement end markets that are manufactured to be readily digestible. The Company has its manufacturing facilities located throughout the United States, Canada, Mexico and China.

About Eastman Chemical

Eastman Chemical Company (Eastman) is an advanced materials and specialty additives company. The Company’s segments include Additives & Functional Products (AFP), Advanced Materials (AM), Chemical Intermediates (CI), and Fibers. In the AFP segment, it manufactures chemicals for products in the coatings, tires, consumables, building and construction, industrial applications, including solar energy markets, animal nutrition, care chemicals, crop protection, and energy markets. In the AM segment, it produces and markets its polymers, films, and plastics with differentiated performance properties for end uses in transportation, consumables, building and construction, durable goods, and health and wellness products. The CI segment leverages large scale and vertical integration from the cellulose and acetyl, olefins, and alkylamines streams to support its specialty operating segments. Its product lines in Fibers segment include Acetate Tow, Acetate Yarn and Acetyl Chemical Products.

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