KMG Chemicals (KMG) versus Asahi Kasei (AHKSY) Financial Review

KMG Chemicals (NYSE: KMG) and Asahi Kasei (OTCMKTS:AHKSY) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations and price targets for KMG Chemicals and Asahi Kasei, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KMG Chemicals 0 1 1 0 2.50
Asahi Kasei 0 0 0 0 N/A

KMG Chemicals currently has a consensus target price of $71.50, indicating a potential upside of 6.21%. Given KMG Chemicals’ higher possible upside, analysts plainly believe KMG Chemicals is more favorable than Asahi Kasei.

Volatility and Risk

KMG Chemicals has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500. Comparatively, Asahi Kasei has a beta of 0.13, meaning that its share price is 87% less volatile than the S&P 500.

Valuation & Earnings

This table compares KMG Chemicals and Asahi Kasei’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KMG Chemicals $333.44 million 3.10 $23.63 million $2.27 29.66
Asahi Kasei $17.51 billion 1.11 $1.07 billion $1.58 17.47

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

Dividends

KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Asahi Kasei pays an annual dividend of $0.19 per share and has a dividend yield of 0.7%. KMG Chemicals pays out 5.3% of its earnings in the form of a dividend. Asahi Kasei pays out 12.0% 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.

Profitability

This table compares KMG Chemicals and Asahi Kasei’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KMG Chemicals 10.59% 15.69% 6.40%
Asahi Kasei 8.19% 13.04% 6.93%

Institutional & Insider Ownership

87.9% of KMG Chemicals shares are held by institutional investors. Comparatively, 0.1% of Asahi Kasei shares are held by institutional investors. 6.1% of KMG Chemicals shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

KMG Chemicals beats Asahi Kasei on 11 of the 15 factors compared between the two stocks.

KMG Chemicals Company Profile

KMG Chemicals, Inc., through its subsidiaries, manufactures, formulates, and distributes specialty chemicals and performance materials worldwide. The company's Electronic Chemicals segment is involved in the sale of high purity process chemicals primarily to etch and clean silicon wafers in the production of semiconductors, photovoltaics, and flat panel displays. This segment's products include sulfuric, phosphoric, and nitric and hydrofluoric acids; ammonium hydroxide; hydrogen peroxide; isopropyl alcohol; other specialty organic solvents; and various blends of chemicals. Its Performance Materials segment supplies drag-reducing agents, industrial valve lubricants, and cleaners and sealants, as well as related services and equipment, including routine and emergency valve maintenance services and training, to the pipeline and energy services markets. This segment also supplies penta products consisting of solid blocks and concentrated solutions to industrial customers who use these preservatives to pressure treat wood products, as well as sells hydrochloric acid, which is a byproduct of penta production for use in the steel and oil well service industries. KMG Chemicals, Inc. was founded in 1985 and is headquartered in Fort Worth, Texas.

Asahi Kasei Company Profile

Asahi Kasei Corporation primarily manufactures, processes, and sells chemical products in Japan and internationally. The company offers caustic soda, chemical fertilizers, nitric acid, ammonia, acrylonitrile, methyl methacrylate, styrene, adipic acid, hexamethylene diamine, AH salt, propionitrile, sodium cyanide, methacrylonitrile, cyclohexyl methacrylate, cyclohexanol, cyclohexane, and cyclohexene; polymers and sheets; chemical intermediates; additives; membranes and systems; clads and anchors; optical and printing materials; electronic materials; polymers; synthetic rubber and elastomers; consumables; cleaners; and packaging products. It is also involved in the construction of homes and apartments; management of rental units and condominiums; brokerage of used homes; remodeling; and mortgage financing. In addition, the company provides prescription drugs and diagnostic reagents; dialyzers, therapeutic apheresis and CRRTs, leukocyte reduction filters, and virus removal filters; defibrillators, AEDs, automated CPRs, fluid resuscitation pump, temperature management products, and data solutions, as well as lithium-ion battery and lead-acid battery separators, and electronic devices. Further, it offers cupro fiber, lining fabric, stretch fiber, spunbond nonwoven, cupro nonwoven fabric, microfiber suede, oil-water separator, deodorizing nonwoven, heat-press formable thermoplastic nonwoven, noise suppression sheet, filament, flame-resistant fiber, honeycomb fabric, cellulose nanobead, and elastic electric wire products. Additionally, the company provides aerated concrete products, foundation systems, insulation materials, and structural components; and engineering and employment agency services, as well as speech recognition middleware and UVC LED products. Asahi Kasei Corporation was founded in 1922 and is headquartered in Tokyo, Japan.

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