Critical Review: Enzymotec (ENZY) versus Methanex (MEOH)

Enzymotec (NASDAQ: ENZY) and Methanex (NASDAQ:MEOH) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Dividends

Methanex pays an annual dividend of $1.20 per share and has a dividend yield of 2.0%. Enzymotec does not pay a dividend. Methanex pays out 39.9% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Enzymotec and Methanex, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enzymotec 0 2 0 0 2.00
Methanex 1 7 5 0 2.31

Enzymotec presently has a consensus price target of $11.75, suggesting a potential downside of 0.84%. Methanex has a consensus price target of $58.23, suggesting a potential downside of 4.93%. Given Enzymotec’s higher possible upside, analysts plainly believe Enzymotec is more favorable than Methanex.

Profitability

This table compares Enzymotec and Methanex’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enzymotec -12.32% -3.26% -2.99%
Methanex 9.81% 16.02% 6.31%

Insider and Institutional Ownership

15.7% of Enzymotec shares are owned by institutional investors. Comparatively, 83.1% of Methanex shares are owned by institutional investors. 1.0% of Methanex shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Enzymotec has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500. Comparatively, Methanex has a beta of 1.82, indicating that its share price is 82% more volatile than the S&P 500.

Earnings & Valuation

This table compares Enzymotec and Methanex’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enzymotec $47.70 million 5.82 -$2.92 million ($0.27) -43.89
Methanex $2.00 billion 2.57 -$12.54 million $3.01 20.35

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

Summary

Methanex beats Enzymotec on 12 of the 16 factors compared between the two stocks.

About Enzymotec

Enzymotec Ltd. is a nutritional ingredients and medical foods company. The Company’s technologies, research expertise and clinical validation process enables it to develop solutions across a range of products. The Company operates in two segments: Nutrition segment and VAYA Pharma segment. Both of the Company’s segments offer a range of products that leverage its lipid-related offerings. Its product suite addresses the entire human life-cycle, from infancy to old age, and comprises ingredients in products ranging from infant formula to nutritional supplements, as well as branded medical foods, sold only under a doctor’s supervision. It markets its product portfolio to established global consumer companies and physicians and target large and growing consumer health and wellness markets. The Company’s clinically-validated products include bio-functional lipid-based compounds designed to address dietary needs, medical disorders and common diseases.

About Methanex

Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company’s subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

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