Contrasting Renewable Energy Group (REGI) & Westlake Chemical (WLK)

Renewable Energy Group (NASDAQ: REGI) and Westlake Chemical (NYSE:WLK) are both oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Profitability

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This table compares Renewable Energy Group and Westlake Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Renewable Energy Group -3.66% -8.19% -4.45%
Westlake Chemical 16.22% 16.48% 6.66%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Renewable Energy Group and Westlake Chemical, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Renewable Energy Group 0 1 2 0 2.67
Westlake Chemical 2 6 8 0 2.38

Renewable Energy Group presently has a consensus target price of $15.33, suggesting a potential upside of 18.68%. Westlake Chemical has a consensus target price of $113.36, suggesting a potential upside of 5.87%. Given Renewable Energy Group’s stronger consensus rating and higher possible upside, research analysts plainly believe Renewable Energy Group is more favorable than Westlake Chemical.

Valuation and Earnings

This table compares Renewable Energy Group and Westlake Chemical’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Renewable Energy Group $2.16 billion 0.23 -$79.07 million ($2.04) -6.33
Westlake Chemical $8.04 billion 1.72 $1.30 billion $5.47 19.57

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

Institutional and Insider Ownership

30.3% of Westlake Chemical shares are held by institutional investors. 2.0% of Renewable Energy Group shares are held by company insiders. Comparatively, 72.0% of Westlake Chemical shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Renewable Energy Group has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Westlake Chemical has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500.

Dividends

Westlake Chemical pays an annual dividend of $0.84 per share and has a dividend yield of 0.8%. Renewable Energy Group does not pay a dividend. Westlake Chemical pays out 15.4% of its earnings in the form of a dividend. Westlake Chemical has increased its dividend for 14 consecutive years.

Summary

Westlake Chemical beats Renewable Energy Group on 14 of the 17 factors compared between the two stocks.

Renewable Energy Group Company Profile

Renewable Energy Group, Inc. produces and sells biofuels and renewable chemicals in North America. The company operates through Biomass-Based Diesel, Services, Renewable Chemicals, and Corporate and Other segments. It acquires feedstock; and manages construction and operates biomass-based diesel production facilities. The company also produces biomass-based diesel from a range of feedstocks, including inedible corn oil, used cooking oil, and inedible animal fat, as well as soybean or canola oil; and markets, distributes, and sells biomass-based diesel and its co-products. In addition, it is involved in the purchase and resale of biomass-based diesel, petroleum-based diesel, renewable identification numbers, California Low Carbon Fuel Standard credits, and raw material feedstocks acquired from third parties; and sale of glycerin, free fatty acids, naphtha, and other co-products of the biomass-based diesel production process. Further, the company provides facility management and operational services to biomass-based diesel production facilities, as well as to other clean-tech companies; and construction management services for biomass-based diesel production facilities. Additionally, it engages in the production of renewable chemicals, advanced biofuels, and other products; and trading of petroleum-based heating oil and diesel fuel. Renewable Energy Group, Inc. was founded in 1996 and is headquartered in Ames, Iowa.

Westlake Chemical Company Profile

Westlake Chemical Corporation manufactures and markets basic chemicals, vinyls, polymers, and building products primarily in North America and Europe. It operates through two segments, Olefins and Vinyls. The Olefins segment offers polyethylene, styrene monomers, and various ethylene co-products, as well as sells propylene, crude butadiene, pyrolysis gasoline, and hydrogen products. The Vinyls segment provides specialty and commodity polyvinyl chloride (PVC), vinyl chloride monomers, ethylene dichloride, chlorine, caustic soda, chlorinated derivative, and ethylene products. This segment also manufactures and sells building products fabricated from PVC, including pipe, fittings, profiles, trims, moldings, fence and decking products, window and door components, and film and sheet products. Westlake Chemical Corporation offers its products to a range of customers, including chemical processors, plastics fabricators, small construction contractors, municipalities, and supply warehouses in various consumer and industrial markets, such as flexible and rigid packaging, automotive products, coatings, water treatment, refrigerants, residential and commercial construction, as well as other durable and non-durable goods. The company was founded in 1985 and is headquartered in Houston, Texas. Westlake Chemical Corporation is a subsidiary of TTWF LP.

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