Contrasting BASF (BASFY) & DSM (RDSMY)

DSM (OTCMKTS: RDSMY) and BASF (OTCMKTS:BASFY) are both large-cap 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.

Dividends

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DSM pays an annual dividend of $0.41 per share and has a dividend yield of 1.5%. BASF pays an annual dividend of $0.60 per share and has a dividend yield of 2.3%. DSM pays out 51.3% of its earnings in the form of a dividend. BASF pays out 33.0% 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. BASF is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares DSM and BASF’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DSM 20.69% 9.43% 4.61%
BASF 9.41% 18.50% 8.08%

Analyst Recommendations

This is a breakdown of current ratings and target prices for DSM and BASF, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DSM 0 0 1 0 3.00
BASF 1 6 1 0 2.00

Insider & Institutional Ownership

0.1% of DSM shares are owned by institutional investors. Comparatively, 0.5% of BASF shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares DSM and BASF’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DSM $9.76 billion 2.00 $2.00 billion $0.80 33.53
BASF $72.83 billion 1.34 $6.87 billion $1.82 14.63

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

Risk and Volatility

DSM has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, BASF has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.

Summary

BASF beats DSM on 8 of the 12 factors compared between the two stocks.

DSM Company Profile

Koninklijke DSM N.V., a science-based company, engages in health, nutrition, and materials businesses worldwide. The company operates through three segments: Nutrition, Materials, and Innovation Center. The Nutrition segment offers nutrients, such as vitamins, carotenoids, nutritional lipids, and other ingredients to feed, food, pharmaceutical, and personal care industries; and food enzymes, cultures, yeast extracts, savory flavors, hydrocolloids, and other specialty ingredients for use in dairy, baking, beverage, and savory applications. The Materials segment provides Dyneema, a fiber solution serving textiles, commercial marine, and sports segments; high-performance plastics primarily for use in automotive and electronics markets, as well as offers solutions to specialized industries, including water management, breathable textiles, and flexible food packaging; and resins solutions for paints and coatings, fiber optic coatings, and 3D printing applications. The Innovation Center segment offers cellulosic bio-ethanol and bio-based succinic acids; anti-reflective coatings for solar glass; and anti-soiling coatings for use in cleaning and maintaining solar farms in desert-like conditions. This segment also produces biomedical materials and technologies that enable medical device manufacturers to enhance care across various medical specialties. Koninklijke DSM N.V. was founded in 1902 and is headquartered in Heerlen, the Netherlands.

BASF Company Profile

BASF SE operates as a chemical company worldwide. It operates through five segments: Chemicals, Performance Products, Functional Materials & Solutions, Agricultural Solutions, and Oil & Gas. The Chemicals segment offers solvents, plasticizers, monomers, and glues, as well as raw materials for detergents, plastics, textile fibers, paints and coatings, crop protection products, and medicines. The Performance Products segment provides dispersions and pigments, care chemicals, nutrition and health products, and performance chemicals that are used in pharmaceuticals, personal care products, and cosmetics, as well as hygiene and household products; and other products for enhancing processes in the paper industry and water treatment, as well as in oil, gas, and ore extraction. The Functional Materials & Solutions segment offers catalysts, battery materials, engineering plastics, polyurethane systems, automotive coatings, surface treatment solutions, and concrete admixtures; and tile adhesives and decorative paints for the automotive, electrical, chemical, and construction industries, as well as for household, and sports and leisure applications. The Agricultural Solutions segment provides fungicides, herbicides, and insecticides, as well as functional crop care products. The Oil & Gas segment explores for and produces oil and gas in Europe, North Africa, Russia, South America, and the Middle East. It also produces ammonia; and transports natural gas in Europe. BASF SE was founded in 1865 and is headquartered in Ludwigshafen am Rhein, Germany.

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