Financial Review: Ferro (FOE) vs. Trinseo (TSE)

Ferro (NYSE: FOE) and Trinseo (NYSE:TSE) are both mid-cap basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Insider and Institutional Ownership

97.3% of Ferro shares are held by institutional investors. Comparatively, 96.9% of Trinseo shares are held by institutional investors. 2.0% of Ferro shares are held by insiders. Comparatively, 0.3% of Trinseo shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Trinseo pays an annual dividend of $1.44 per share and has a dividend yield of 1.9%. Ferro does not pay a dividend. Trinseo pays out 22.5% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares Ferro and Trinseo’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ferro $1.15 billion 1.78 -$20.81 million $0.52 46.75
Trinseo $3.72 billion 0.89 $318.31 million $6.39 11.79

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

Volatility and Risk

Ferro has a beta of 1.94, suggesting that its share price is 94% more volatile than the S&P 500. Comparatively, Trinseo has a beta of 2.33, suggesting that its share price is 133% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Ferro and Trinseo, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ferro 0 0 4 0 3.00
Trinseo 0 2 3 0 2.60

Ferro presently has a consensus target price of $23.00, suggesting a potential downside of 5.39%. Trinseo has a consensus target price of $76.25, suggesting a potential upside of 1.19%. Given Trinseo’s higher possible upside, analysts plainly believe Trinseo is more favorable than Ferro.

Profitability

This table compares Ferro and Trinseo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ferro 3.44% 35.77% 7.57%
Trinseo 6.78% 65.80% 13.58%

Summary

Trinseo beats Ferro on 9 of the 16 factors compared between the two stocks.

Ferro Company Profile

Ferro Corporation (Ferro) produces specialty materials that are sold to a range of manufacturers. The Company’s segments include Performance Coatings (metal and ceramic coatings), Performance Colors and Glass (glass coatings), and Color Solutions. Its Performance Coatings segment includes Tile Coating Systems and Porcelain Enamel. Its manufacturers make products for various end-use markets. The Company’s products fall into two general categories: functional coatings, which perform specific functions in the manufacturing processes and end products of its customers, and color solutions, which provide aesthetic and performance characteristics to its customers’ products. Its products are used in a range of product applications in markets, including appliances, automobiles, building and renovation, electronics, household furnishings, industrial products and packaging.

Trinseo Company Profile

Trinseo S.A. is a materials company engaged in the manufacture and marketing of synthetic rubber, latex and plastics. The Company’s segments include Latex Binders, Synthetic Rubber, Performance Plastics, Basic Plastics, Feedstocks and Americas Styrenics. The Latex Binders segment produces styrene-butadiene latex (SB latex) and other latex polymers and binders. The Synthetic Rubber segment produces synthetic rubber products used in tires, impact modifiers and technical rubber products. The Performance Plastics segment produces compounds and blends and specialized acrylonitrile-butadiene-styrene (ABS) grades. The Basic Plastics segment produces styrenic polymers, including polystyrene, basic ABS, and styrene-acrylonitrile (SAN) products, as well as polycarbonate (PC). The Feedstocks segment includes its production and procurement of styrene monomer outside of North America. The Americas Styrenics segment consists of the operations of its joint venture, Americas Styrenics LLC.

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