Dow Chemical (NYSE: DOW) and DowDuPont (NASDAQ:DWDP) are both large-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, valuation and earnings.

Dividends

Dow Chemical pays an annual dividend of $1.84 per share and has a dividend yield of 2.8%. DowDuPont does not pay a dividend. Dow Chemical pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DowDuPont has increased its dividend for 6 consecutive years.

Valuation and Earnings

This table compares Dow Chemical and DowDuPont’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dow Chemical $52.57 billion 1.55 $9.27 billion $2.39 27.89
DowDuPont N/A N/A N/A N/A N/A

Dow Chemical has higher revenue and earnings than DowDuPont.

Profitability

This table compares Dow Chemical and DowDuPont’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dow Chemical 9.82% 19.01% 6.69%
DowDuPont 7.73% N/A N/A

Institutional and Insider Ownership

67.8% of Dow Chemical shares are held by institutional investors. 0.9% of Dow Chemical shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for Dow Chemical and DowDuPont, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dow Chemical 0 3 6 0 2.67
DowDuPont 1 3 16 0 2.75

Dow Chemical presently has a consensus price target of $72.14, indicating a potential upside of 8.24%. DowDuPont has a consensus price target of $79.44, indicating a potential upside of 9.86%. Given DowDuPont’s stronger consensus rating and higher possible upside, analysts plainly believe DowDuPont is more favorable than Dow Chemical.

Summary

Dow Chemical beats DowDuPont on 7 of the 12 factors compared between the two stocks.

Dow Chemical Company Profile

The Dow Chemical Company manufactures and supplies products used primarily as raw materials in the manufacture of customer products and services. The Company’s segments include Agricultural Sciences, which is engaged in providing crop protection and seed/plant biotechnology products and technologies, urban pest management solutions and healthy oils; Consumer Solutions, which consists of Consumer Care, Dow Automotive Systems, Dow Electronic Materials and Consumer Solutions-Silicones businesses; Infrastructure Solutions, which consists of Dow Building & Construction, Dow Coating Materials, Energy & Water Solutions, Performance Monomers and Infrastructure Solutions-Silicones businesses; Performance Materials & Chemicals, which consists of Chlor-Alkali and Vinyl, Industrial Solutions and Polyurethanes businesses, and Performance Plastics, which consists of Dow Elastomers, Dow Electrical and Telecommunications, Dow Packaging and Specialty Plastics, Energy and Hydrocarbons businesses.

DowDuPont Company Profile

DowDuPont Inc. is a holding company formed through the merger of equals between The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont). The Company’s business divisions include Agriculture division, Material Science division, and a Specialty Products division. The Agriculture Division offers a complete portfolio of products and technologies, and a pipeline of germplasm, traits and crop protection. The Materials Science Division provides solutions, such as packaging, transportation, infrastructure and customer care. The Specialty Products division provides solution for industrial, safety, energy, food, nutrition, construction, electronics and consumer goods industries. The company provides solutions to a range of markets, including aerospace, automotive, consumer electronics, military, printing, renewable energy, semiconductors, child nutrition, dietary supplements, carpet and apparel, fertilizer, and oil and gas/energy.

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