UFP Technologies (NASDAQ:UFPT) versus Westlake Chemical (WLK) Critical Contrast

Westlake Chemical (NYSE: WLK) and UFP Technologies (NASDAQ:UFPT) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, earnings, risk, analyst recommendations, institutional ownership, dividends and valuation.

Profitability

This table compares Westlake Chemical and UFP Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westlake Chemical 7.74% 15.59% 5.95%
UFP Technologies 5.43% 6.83% 6.03%

Earnings and Valuation

This table compares Westlake Chemical and UFP Technologies’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westlake Chemical $5.08 billion 2.90 $398.85 million $4.60 24.77
UFP Technologies $146.13 million 1.42 $7.97 million $1.09 26.24

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

Risk and Volatility

Westlake Chemical has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500. Comparatively, UFP Technologies has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500.

Institutional and Insider Ownership

30.4% of Westlake Chemical shares are owned by institutional investors. Comparatively, 69.1% of UFP Technologies shares are owned by institutional investors. 71.7% of Westlake Chemical shares are owned by insiders. Comparatively, 13.3% of UFP Technologies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Westlake Chemical pays an annual dividend of $0.84 per share and has a dividend yield of 0.7%. UFP Technologies does not pay a dividend. Westlake Chemical pays out 18.3% of its earnings in the form of a dividend. UFP Technologies has increased its dividend for 14 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Westlake Chemical and UFP Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westlake Chemical 0 5 9 0 2.64
UFP Technologies 0 0 0 0 N/A

Westlake Chemical presently has a consensus target price of $107.25, suggesting a potential downside of 5.87%. Given Westlake Chemical’s higher possible upside, research analysts clearly believe Westlake Chemical is more favorable than UFP Technologies.

Summary

Westlake Chemical beats UFP Technologies on 11 of the 16 factors compared between the two stocks.

About Westlake Chemical

Westlake Chemical Corporation is a global manufacturer and marketer of basic chemicals, vinyls, polymers and building products. The Company’s products include a range of chemicals, which are fundamental to various consumer and industrial markets, including flexible and rigid packaging, automotive products, coatings, water treatment, refrigerants, residential and commercial construction, as well as other durable and non-durable goods. Its segments include Olefins and Vinyls. It manufactures ethylene (through Westlake Chemical OpCo LP (OpCo)), polyethylene, styrene and associated co-products at its manufacturing facility in Lake Charles and polyethylene at its Longview facility. The Company’s products in its Vinyls segment include polyvinyl chloride (PVC), vinyl chloride monomer (VCM), ethylene dichloride (EDC), chlor-alkali (chlorine and caustic soda) and chlorinated derivative products and, through OpCo, ethylene. It also manufactures and sells building products fabricated from PVC.

About UFP Technologies

UFP Technologies, Inc. is a designer and custom converter of foams, plastics, composites and natural fiber materials. The Company is engaged in providing solutions to customers primarily within the medical, automotive, consumer, electronics, industrial, and aerospace and defense markets. It converts these materials using laminating, molding, and fabricating manufacturing technologies. The Company’s raw materials consist of polyethylene and polyurethane foams, sheet plastics, pulp fiber, cross-linked polyethylene and reticulated polyurethane foams, fabric and foam laminates, and natural fiber materials. The Company converts these materials to provide customers various solutions, including automotive interior trim, medical device components, disposable wound care components, military uniform and gear components, athletic padding, air filtration, high-temperature insulation, abrasive nail files and other beauty aids, and cushion packaging for their products.

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