Financial Contrast: NewMarket (NEU) and Quaker Chemical (KWR)

Quaker Chemical (NYSE: KWR) and NewMarket (NYSE:NEU) are both basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Analyst Ratings

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This is a breakdown of current recommendations and price targets for Quaker Chemical and NewMarket, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quaker Chemical 0 4 0 0 2.00
NewMarket 0 0 0 0 N/A

Quaker Chemical currently has a consensus target price of $162.00, indicating a potential upside of 8.31%. Given Quaker Chemical’s higher possible upside, research analysts plainly believe Quaker Chemical is more favorable than NewMarket.

Volatility & Risk

Quaker Chemical has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, NewMarket has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500.

Insider & Institutional Ownership

92.2% of Quaker Chemical shares are owned by institutional investors. Comparatively, 55.7% of NewMarket shares are owned by institutional investors. 3.6% of Quaker Chemical shares are owned by company insiders. Comparatively, 16.9% of NewMarket shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Quaker Chemical pays an annual dividend of $1.42 per share and has a dividend yield of 0.9%. NewMarket pays an annual dividend of $7.00 per share and has a dividend yield of 1.8%. Quaker Chemical pays out 28.3% of its earnings in the form of a dividend. Quaker Chemical has increased its dividend for 8 consecutive years and NewMarket has increased its dividend for 9 consecutive years. NewMarket is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Quaker Chemical $820.08 million 2.43 $20.27 million $5.01 29.85
NewMarket $2.20 billion 2.14 $190.50 million N/A N/A

NewMarket has higher revenue and earnings than Quaker Chemical.

Profitability

This table compares Quaker Chemical and NewMarket’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quaker Chemical 2.47% 15.48% 9.11%
NewMarket 8.67% 37.86% 13.43%

Summary

NewMarket beats Quaker Chemical on 9 of the 14 factors compared between the two stocks.

Quaker Chemical Company Profile

Quaker Chemical Corporation develops, produces, and markets various formulated chemical specialty products for a range of heavy industrial and manufacturing applications in North America, Europe, the Middle East, Africa, the Asia/Pacific, and South America. Its products include rolling lubricants used by manufacturers of steel in the hot and cold rolling of steel, and aluminum in the hot rolling of aluminum; machining and grinding compounds for use in cutting, shaping, and grinding metal parts; hydraulic fluids for steel, metalworking, and other customers to operate hydraulic equipment; corrosion preventives to protect metals during manufacture, storage, and shipment; and specialty greases used in automotive and aerospace production processes, steel manufacturing, and various other applications. The company also provides metal finishing compounds to prepare metal surfaces for special treatments, such as galvanizing and tin plating, as well as to prepare metal for further processing; forming compounds used to facilitate the drawing and extrusion of metal products; chemical milling maskants for the aerospace industry; and temporary and permanent coatings for metal and concrete products. In addition, it offers construction products comprising flexible sealants and protective coatings for various applications; bio-lubricants used in machinery in forestry and construction industries; and die casting lubricants, as well as provides chemical management services. The company serves steel, aluminum, automotive, mining, aerospace, tube and pipe, cans, and other industries. Quaker Chemical Corporation markets and sells its products directly, as well as through distributors and agents. The company was formerly known as Quaker Chemical Products Corporation and changed its name to Quaker Chemical Corporation in August 1962. Quaker Chemical Corporation was founded in 1918 and is headquartered in Conshohocken, Pennsylvania.

NewMarket Company Profile

NewMarket Corporation is a holding company. The Company is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company operates through petroleum additives segment, which is primarily represented by Afton. The Company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end user applications. The petroleum additives product applications include lubricant additives and fuel additives. The Company’s All other category includes the operations of the TEL business, as well as contract manufacturing and services performed by Ethyl. The Ethyl plant facility is located in Houston, Texas. It is involved in terminal operations related to TEL and other fuel additives.

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