Contrasting CSW Industrials (CSWI) & Westlake Chemical Partners (NYSE:WLKP)

Westlake Chemical Partners (NYSE: WLKP) and CSW Industrials (NASDAQ:CSWI) are both small-cap basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.

Dividends

Westlake Chemical Partners pays an annual dividend of $1.50 per share and has a dividend yield of 6.0%. CSW Industrials does not pay a dividend. Westlake Chemical Partners pays out 95.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westlake Chemical Partners has raised its dividend for 2 consecutive years.

Institutional and Insider Ownership

55.2% of Westlake Chemical Partners shares are owned by institutional investors. Comparatively, 67.8% of CSW Industrials shares are owned by institutional investors. 2.1% of CSW Industrials shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Westlake Chemical Partners and CSW Industrials’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westlake Chemical Partners $986.74 million 0.68 $40.94 million $1.57 15.89
CSW Industrials $327.08 million 2.24 $11.07 million $1.19 38.61

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Westlake Chemical Partners and CSW Industrials, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westlake Chemical Partners 0 3 2 0 2.40
CSW Industrials 0 1 2 0 2.67

Westlake Chemical Partners currently has a consensus target price of $26.88, indicating a potential upside of 7.72%. CSW Industrials has a consensus target price of $60.00, indicating a potential upside of 30.58%. Given CSW Industrials’ stronger consensus rating and higher possible upside, analysts clearly believe CSW Industrials is more favorable than Westlake Chemical Partners.

Profitability

This table compares Westlake Chemical Partners and CSW Industrials’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westlake Chemical Partners 3.80% 4.73% 2.86%
CSW Industrials 5.39% 10.77% 7.66%

Summary

CSW Industrials beats Westlake Chemical Partners on 10 of the 15 factors compared between the two stocks.

About Westlake Chemical Partners

Westlake Chemical Partners LP is a limited partnership formed by Westlake Chemical Corporation (Westlake). The Company operates, acquires and develops ethylene production facilities and other assets. Its business and operations are conducted through Westlake Chemical OpCo LP (OpCo). OpCo sells ethylene to Westlake and others, as well as sells co-products of ethylene production, including propylene, crude butadiene, pyrolysis gasoline and hydrogen. As of December 31, 2016, OpCo’s assets included three ethylene production facilities, which primarily convert ethane into ethylene, and a 200-mile ethylene pipeline. As of December 31, 2016, OpCo owned two ethylene production facilities at Westlake’s Lake Charles, Louisiana site (Petro 1 and Petro 2, collectively Lake Charles Olefins), and one ethylene production facility at Westlake’s Calvert City, Kentucky site (Calvert City Olefins), with an annual capacity of approximately 630 million pounds.

About CSW Industrials

CSW Industrials, Inc. (CSWI) is a diversified industrial growth company. The Company operates through three segments: Industrial Products; Coatings, Sealants & Adhesives, and Specialty Chemicals. The Industrial Products segment consists of specialty mechanical products; fire and smoke protection products; architecturally specified building products, and storage, filtration and application equipment. The Coatings, Sealants & Adhesives segment comprises coatings and penetrants, pipe thread sealants, firestopping sealants, and caulks and adhesives/solvent cements. The Specialty Chemicals segment manufactures and supplies specialized consumables that impart or enhance properties, such as lubricity, anti-seize qualities, friction and heat control. Markets that it serves include HVAC, industrial, rail, plumbing, architecturally specified building products, energy, mining and other general industrial markets.

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