Albemarle Corporation (ALB) versus Methanex Corporation (NASDAQ:MEOH) Critical Analysis

Methanex Corporation (NASDAQ: MEOH) and Albemarle Corporation (NYSE:ALB) are both mid-cap basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.

Risk & Volatility

Methanex Corporation has a beta of 1.8, indicating that its stock price is 80% more volatile than the S&P 500. Comparatively, Albemarle Corporation has a beta of 1.72, indicating that its stock price is 72% more volatile than the S&P 500.

Profitability

This table compares Methanex Corporation and Albemarle Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Methanex Corporation 9.81% 16.02% 6.31%
Albemarle Corporation 30.07% 11.61% 5.99%

Insider and Institutional Ownership

83.4% of Methanex Corporation shares are held by institutional investors. Comparatively, 86.6% of Albemarle Corporation shares are held by institutional investors. 1.0% of Methanex Corporation shares are held by company insiders. Comparatively, 0.7% of Albemarle Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Methanex Corporation and Albemarle Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Methanex Corporation $2.00 billion 2.15 -$12.54 million $3.01 17.02
Albemarle Corporation $2.68 billion 5.92 $643.67 million $2.80 51.20

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

Dividends

Methanex Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 2.3%. Albemarle Corporation pays an annual dividend of $1.28 per share and has a dividend yield of 0.9%. Methanex Corporation pays out 39.9% of its earnings in the form of a dividend. Albemarle Corporation pays out 45.7% 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. Albemarle Corporation has increased its dividend for 13 consecutive years. Methanex Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Methanex Corporation and Albemarle Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Methanex Corporation 1 5 7 0 2.46
Albemarle Corporation 0 7 12 0 2.63

Methanex Corporation currently has a consensus target price of $54.73, indicating a potential upside of 6.85%. Albemarle Corporation has a consensus target price of $125.67, indicating a potential downside of 12.35%. Given Methanex Corporation’s higher possible upside, analysts plainly believe Methanex Corporation is more favorable than Albemarle Corporation.

Summary

Albemarle Corporation beats Methanex Corporation on 9 of the 17 factors compared between the two stocks.

Methanex Corporation Company Profile

Methanex Corp is a Canada-based producer and supplier of methanol to a range of international markets. The Company operates production sites in Canada, Chile, Egypt, New Zealand, the United States, as well as Trinidad and Tobago. Its global operations are supported by a global supply chain of terminals, storage facilities and a fleet of methanol ocean tankers. The Company’s subsidiary, Waterfront Shipping Company Limited, operates its fleet, which is made up of over 20 vessels ranging from 3,000 to 50,000 deadweight tons of capacity. It has over three production facilities in New Zealand that supply methanol primarily to customers in Asia Pacific. The Company operates over two plants in Trinidad, Titan and Atlas, which supply methanol to markets in North America, Europe, Asia Pacific and South America. Its joint venture facility in Egypt supplies methanol to markets in Europe and Asia Pacific. Its plant in Medicine Hat, Alberta, supplies methanol to customers in North America.

Albemarle Corporation Company Profile

Albemarle Corporation is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consist of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services. As of December 31, 2016, the Company and its joint ventures operated 31 production and research and development (R&D) facilities, as well as a number of administrative and sales offices, around the world.

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