Analyzing OMNOVA Solutions (OMN) & West Pharmaceutical Services (WST)

OMNOVA Solutions (NYSE: OMN) and West Pharmaceutical Services (NYSE:WST) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, profitability, risk and valuation.

Insider and Institutional Ownership

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89.4% of OMNOVA Solutions shares are owned by institutional investors. Comparatively, 94.4% of West Pharmaceutical Services shares are owned by institutional investors. 4.6% of OMNOVA Solutions shares are owned by company insiders. Comparatively, 2.7% of West Pharmaceutical Services shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility & Risk

OMNOVA Solutions has a beta of 2.07, suggesting that its stock price is 107% more volatile than the S&P 500. Comparatively, West Pharmaceutical Services has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Valuation & Earnings

This table compares OMNOVA Solutions and West Pharmaceutical Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
OMNOVA Solutions $783.10 million 0.62 -$87.80 million $0.56 19.38
West Pharmaceutical Services $1.60 billion 3.92 $150.70 million $2.78 30.45

West Pharmaceutical Services has higher revenue and earnings than OMNOVA Solutions. OMNOVA Solutions is trading at a lower price-to-earnings ratio than West Pharmaceutical Services, indicating that it is currently the more affordable of the two stocks.

Dividends

West Pharmaceutical Services pays an annual dividend of $0.56 per share and has a dividend yield of 0.7%. OMNOVA Solutions does not pay a dividend. West Pharmaceutical Services pays out 20.1% of its earnings in the form of a dividend. West Pharmaceutical Services has raised its dividend for 25 consecutive years.

Analyst Ratings

This is a summary of current recommendations for OMNOVA Solutions and West Pharmaceutical Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OMNOVA Solutions 0 1 2 0 2.67
West Pharmaceutical Services 0 3 2 0 2.40

OMNOVA Solutions presently has a consensus target price of $12.00, indicating a potential upside of 10.60%. West Pharmaceutical Services has a consensus target price of $106.80, indicating a potential upside of 26.18%. Given West Pharmaceutical Services’ higher possible upside, analysts clearly believe West Pharmaceutical Services is more favorable than OMNOVA Solutions.

Profitability

This table compares OMNOVA Solutions and West Pharmaceutical Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OMNOVA Solutions -10.67% 32.70% 4.15%
West Pharmaceutical Services 9.42% 14.68% 9.97%

Summary

West Pharmaceutical Services beats OMNOVA Solutions on 11 of the 16 factors compared between the two stocks.

OMNOVA Solutions Company Profile

OMNOVA Solutions Inc. provides emulsion polymers, specialty chemicals, and engineered surfaces for various commercial, industrial, and residential end uses in the United States, Europe, and Asia. The company operates in two segments, Specialty Solutions and Performance Materials. The Specialty Solutions segment designs, develops, produces, and markets specialty polymers which are used in various applications, such as architectural and industrial coatings; nonwovens used in hygiene products, filtration, and construction; drilling additives for oil and gas drilling, cementing, and fracking; elastomeric modification of plastic casings and hoses used in household, industrial products, and automobiles; tapes and adhesives; sports surfaces; textile finishes; commercial building refurbishment; new construction; residential cabinets; flooring; ceiling tiles; furnishings; manufactured housing; health care patient; common area furniture; and various industrial films applications. This segment primarily sells its products directly to manufacturers. The Performance Chemicals segment produces resins, binders, antioxidants, hollow plastic pigments, coated fabrics, and rubber reinforcing products which are used in tire cord, polymer stabilization, industrial rubber, carpet, paper, and various other applications. This segment distributes its products primarily through a direct sales force and agents to manufacturers of retail store fixtures, cabinets, furniture, seating, health care components, and other products. OMNOVA Solutions Inc. was founded in 1999 and is headquartered in Beachwood, Ohio.

West Pharmaceutical Services Company Profile

West Pharmaceutical Services, Inc. manufactures and sells containment and delivery systems for injectable drugs and healthcare products in the United States, Germany, France, Other European countries, and internationally. The company operates through two segments, Proprietary Products and Contract-Manufactured Products. The Proprietary Products segment offers stoppers and seals for injectable packaging systems; syringe and cartridge components, including custom solutions for the needs of injectable drug applications, as well as administration systems that enhance the safe delivery of drugs through advanced reconstitution, mixing, and transfer technologies; and films, coatings, and washing and sterilization processes and services to enhance the quality of packaging components. It also provides drug containment solutions, including CZ, a cyclic olefin polymer in the form of vials, syringes, and cartridges; and self-injection devices, as well as specialized testing services for drug packaging, devices, and administration systems. This segment serves biologic, generic, and pharmaceutical drug companies. The Contract-Manufactured Products segment is involved in the design, manufacture, and automated assembly of components and devices used in surgical, diagnostic, ophthalmic, injectable, and other drug delivery systems, as well as consumer products. This segment serves pharmaceutical, diagnostic, and medical device companies. The company distributes its products through its sales force and distribution network, as well as contract sales agents and regional distributors. West Pharmaceutical Services, Inc. was founded in 1923 and is headquartered in Exton, Pennsylvania.

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