KMG Chemicals (NYSE: KMG) and Kronos Worldwide (NYSE:KRO) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Analyst Ratings

This is a summary of recent ratings for KMG Chemicals and Kronos Worldwide, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KMG Chemicals 0 0 1 0 3.00
Kronos Worldwide 1 1 0 0 1.50

KMG Chemicals currently has a consensus target price of $37.00, suggesting a potential downside of 22.37%. Kronos Worldwide has a consensus target price of $17.00, suggesting a potential downside of 12.82%. Given Kronos Worldwide’s higher possible upside, analysts clearly believe Kronos Worldwide is more favorable than KMG Chemicals.

Profitability

This table compares KMG Chemicals and Kronos Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KMG Chemicals 7.05% 15.66% 9.75%
Kronos Worldwide 18.57% 24.73% 9.09%

Risk and Volatility

KMG Chemicals has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, Kronos Worldwide has a beta of 2.1, suggesting that its stock price is 110% more volatile than the S&P 500.

Dividends

KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Kronos Worldwide pays an annual dividend of $0.60 per share and has a dividend yield of 3.1%. KMG Chemicals pays out 6.7% of its earnings in the form of a dividend. Kronos Worldwide pays out 24.9% 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.

Insider & Institutional Ownership

71.2% of KMG Chemicals shares are held by institutional investors. Comparatively, 14.4% of Kronos Worldwide shares are held by institutional investors. 6.9% of KMG Chemicals shares are held by insiders. Comparatively, 0.1% of Kronos Worldwide shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares KMG Chemicals and Kronos Worldwide’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
KMG Chemicals $312.48 million 1.81 $51.47 million $1.80 26.48
Kronos Worldwide $1.50 billion 1.51 $240.60 million $2.41 8.09

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

KMG Chemicals Company Profile

KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.

Kronos Worldwide Company Profile

Kronos Worldwide, Inc. (Kronos) is a producer and marketer of titanium dioxide (TiO2) pigments, a base industrial product that is used in a range of applications. The Company, along with its distributors and agents, sells and provides technical services for its products with sales in Europe and North America. It offers its customers a portfolio of products that include TiO2 pigment grades under the Kronos brand, which provides a range of performance properties. It offers its products to domestic and international paint, plastics, decorative laminate and paper manufacturers. It ships TiO2 to its customers in either a powder or slurry form through rail, truck or ocean carrier. It sells and provides technical services for its products in three end use markets, which include coatings, plastics and paper. It produces TiO2 in two crystalline forms, which include rutile and anatase. Rutile TiO2 is manufactured using both a chloride production process and a sulfate production process.

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