Critical Analysis: PolyOne (POL) versus Eastman Chemical (EMN)

PolyOne (NYSE: POL) and Eastman Chemical (NYSE:EMN) are both basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Analyst Recommendations

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This is a summary of recent recommendations and price targets for PolyOne and Eastman Chemical, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PolyOne 0 3 4 0 2.57
Eastman Chemical 0 7 8 0 2.53

PolyOne presently has a consensus price target of $45.00, indicating a potential upside of 3.78%. Eastman Chemical has a consensus price target of $102.14, indicating a potential downside of 3.13%. Given PolyOne’s stronger consensus rating and higher possible upside, equities analysts plainly believe PolyOne is more favorable than Eastman Chemical.

Profitability

This table compares PolyOne and Eastman Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PolyOne -1.73% 29.46% 6.68%
Eastman Chemical 15.44% 22.02% 6.98%

Risk & Volatility

PolyOne has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500.

Institutional & Insider Ownership

93.9% of PolyOne shares are held by institutional investors. Comparatively, 85.5% of Eastman Chemical shares are held by institutional investors. 1.3% of PolyOne shares are held by company insiders. Comparatively, 1.1% of Eastman Chemical shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares PolyOne and Eastman Chemical’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PolyOne $3.23 billion 1.09 -$57.70 million $2.21 19.62
Eastman Chemical $9.55 billion 1.58 $1.38 billion $7.61 13.86

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

Dividends

PolyOne pays an annual dividend of $0.70 per share and has a dividend yield of 1.6%. Eastman Chemical pays an annual dividend of $2.24 per share and has a dividend yield of 2.1%. PolyOne pays out 31.7% of its earnings in the form of a dividend. Eastman Chemical pays out 29.4% 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. PolyOne has increased its dividend for 6 consecutive years and Eastman Chemical has increased its dividend for 6 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Eastman Chemical beats PolyOne on 9 of the 16 factors compared between the two stocks.

PolyOne Company Profile

PolyOne Corporation (PolyOne) provides specialized polymer materials, services and solutions. The Company’s segments include Color, Additives and Inks; Specialty Engineered Materials; Performance Products and Solutions, and PolyOne Distribution. The Color, Additives and Inks segment provides custom color and additive concentrates in solid and liquid form for thermoplastics, dispersions for thermosets. The Specialty Engineered Materials segment provides specialty polymer formulations, services and solutions for designers, assemblers and processors of thermoplastic materials. The Performance Products and Solutions segment consists of the Geon Performance Materials and Producer Services business units. As of December 31, 2016, the PolyOne Distribution segment distributed more than 4,000 grades of engineering and commodity grade resins.

Eastman Chemical Company Profile

Eastman Chemical Company manufactures and sells materials, specialty additives, chemicals, and fibers in the United States and internationally. The company's Additives & Functional Products segment offers specialty coalescents, specialty and commodity solvents, paint additives, and specialty polymers; hydrocarbon and rosin resins; insoluble sulfur and antidegradant rubber additives; performance resins and amine derivative-based building blocks; heat transfer and aviation fluids; formic acid-based solutions; and metam-based soil fumigants, thiram and ziram based fungicides, and plant growth regulators. Its products are used in transportation, consumables, building and construction, industrial applications, animal nutrition, care chemicals, crop protection, and energy markets. Its Advanced Materials segment provides copolyesters, cellulose esters, polyvinyl butyral (PVB) sheets, specialty (PVB) intermediates, and window film and protective film, and aftermarket applied film products for value-added end uses in transportation, consumables, building and construction, durable goods, and health and wellness markets. The company's Chemical Intermediates segment offers Olefin derivatives, acetyl derivatives, ethylene, and commodity solvents; primary non-phthalate and phthala plasticizers, and a range of niche non- phthalate plasticizers; and methylamines and salts higher amines and solvents. Its Fibers segment manufactures and sells cellulose acetate tow for use in filtration media primarily cigarette filters; triacetin, cellulose acetate flake, and acetyl raw materials for other acetate fiber producers; and natural, acetate, and polyester yarn, as well as solution-dyed acetate yarn for use in apparel, home furnishings, and industrial fabrics. The company also offers aviation turbine engine oil; wet-laid nonwovens; and specialty films. Eastman Chemical Company was founded in 1920 and is headquartered in Kingsport, Tennessee.

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