Reviewing Rayonier Advanced Materials (RYAM) & Celanese (CE)

Celanese (NYSE: CE) and Rayonier Advanced Materials (NYSE:RYAM) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Valuation & Earnings

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This table compares Celanese and Rayonier Advanced Materials’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Celanese $6.14 billion 2.23 $843.00 million $7.51 13.44
Rayonier Advanced Materials $961.00 million 1.12 $324.96 million $0.97 21.43

Celanese has higher revenue and earnings than Rayonier Advanced Materials. Celanese is trading at a lower price-to-earnings ratio than Rayonier Advanced Materials, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Celanese and Rayonier Advanced Materials’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Celanese 13.73% 32.96% 11.61%
Rayonier Advanced Materials 33.92% 16.99% 3.33%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Celanese and Rayonier Advanced Materials, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Celanese 1 5 11 0 2.59
Rayonier Advanced Materials 0 1 4 0 2.80

Celanese currently has a consensus target price of $115.79, indicating a potential upside of 14.67%. Rayonier Advanced Materials has a consensus target price of $20.20, indicating a potential downside of 2.84%. Given Celanese’s higher possible upside, equities research analysts plainly believe Celanese is more favorable than Rayonier Advanced Materials.

Insider & Institutional Ownership

95.8% of Celanese shares are owned by institutional investors. Comparatively, 94.2% of Rayonier Advanced Materials shares are owned by institutional investors. 0.4% of Celanese shares are owned by insiders. Comparatively, 2.1% of Rayonier Advanced Materials shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Celanese pays an annual dividend of $1.84 per share and has a dividend yield of 1.8%. Rayonier Advanced Materials pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Celanese pays out 24.5% of its earnings in the form of a dividend. Rayonier Advanced Materials pays out 28.9% 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. Celanese has increased its dividend for 6 consecutive years. Celanese is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Celanese has a beta of 1.33, meaning that its stock price is 33% more volatile than the S&P 500. Comparatively, Rayonier Advanced Materials has a beta of 3.51, meaning that its stock price is 251% more volatile than the S&P 500.

Summary

Celanese beats Rayonier Advanced Materials on 12 of the 17 factors compared between the two stocks.

Celanese Company Profile

Celanese Corporation (Celanese) is a technology and specialty materials company. The Company’s segments include Advanced Engineered Materials, Consumer Specialties, Industrial Specialties, Acetyl Intermediates and Other Activities. The Advanced Engineered Materials segment includes the Company’s engineered materials business and certain affiliates. The Consumer Specialties segment includes the Company’s cellulose derivatives and food ingredients businesses, which serve consumer-driven applications. The Industrial Specialties segment includes the Company’s emulsion polymers and ethylene vinyl acetate (EVA) polymers businesses. The Acetyl Intermediates segment includes the Company’s intermediate chemistry business, which produces and supplies acetyl products, including acetic acid, vinyl acetate monomer (VAM), acetic anhydride and acetate esters. The Company has operations in North America, Europe and Asia. As of December 31, 2016, the Company had 30 global production facilities.

Rayonier Advanced Materials Company Profile

Rayonier Advanced Materials Inc. is engaged in the production of cellulose specialties. The Company’s product lines include cellulose specialties and commodity products. Its products are used in manufacturing processes. The Company’s products are sold throughout the world to companies for use in various industrial applications, and to produce a range of products, including cigarette filters, foods, pharmaceuticals, textiles and electronics. The Company focuses on producing various forms of cellulose specialties products, such as cellulose acetate and cellulose ethers. The Company’s production facilities are located in Jesup, Georgia and Fernandina Beach, Florida. The Jesup plant can produce cellulose specialties or commodity products using both hardwood and softwood in a pre-hydrolyzed kraft or high potential of hydrogen (pH) cooking process. The Fernandina Beach plant can produce cellulose specialties or commodity products using softwood in a sulfite or low pH cooking process.

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