Critical Comparison: NewMarket (NEU) & PQ Group (PQG)

NewMarket (NYSE: NEU) and PQ Group (NYSE:PQG) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current recommendations and price targets for NewMarket and PQ Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewMarket 0 0 0 0 N/A
PQ Group 0 3 7 0 2.70

PQ Group has a consensus target price of $19.75, suggesting a potential upside of 36.96%. Given PQ Group’s higher possible upside, analysts plainly believe PQ Group is more favorable than NewMarket.

Dividends

NewMarket pays an annual dividend of $7.00 per share and has a dividend yield of 1.7%. PQ Group does not pay a dividend. NewMarket pays out 43.6% of its earnings in the form of a dividend. PQ Group has raised its dividend for 9 consecutive years.

Insider and Institutional Ownership

59.2% of NewMarket shares are owned by institutional investors. Comparatively, 68.0% of PQ Group shares are owned by institutional investors. 16.8% of NewMarket shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares NewMarket and PQ Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NewMarket $2.20 billion 2.27 $190.50 million $16.07 26.39
PQ Group $1.06 billion 1.83 -$79.74 million $0.02 721.00

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

Profitability

This table compares NewMarket and PQ Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewMarket 8.67% 37.86% 13.43%
PQ Group N/A N/A N/A

Summary

NewMarket beats PQ Group on 9 of the 15 factors compared between the two stocks.

About NewMarket

NewMarket Corporation is a holding company. The Company is the parent company of Afton Chemical Corporation (Afton), Ethyl Corporation (Ethyl), NewMarket Services Corporation (NewMarket Services), and NewMarket Development Corporation (NewMarket Development). The Company operates through petroleum additives segment, which is primarily represented by Afton. The Company manufactures chemical components that are selected to perform one or more specific functions and combine those chemicals with other chemicals or components to form additive packages for use in specified end user applications. The petroleum additives product applications include lubricant additives and fuel additives. The Company’s All other category includes the operations of the TEL business, as well as contract manufacturing and services performed by Ethyl. The Ethyl plant facility is located in Houston, Texas. It is involved in terminal operations related to TEL and other fuel additives.

About PQ Group

PQ Group Holdings Inc is a global provider of catalysts, specialty materials, chemicals and services that enable environmental improvements. The Company’s products and solutions help companies produce vehicles with fuel efficiency. The Company has developed zeolite-based catalysts to reduce pollutants in diesel engines. The Company’s segments include environmental catalysts and services, and performance materials and chemicals. Environmental catalysts and services segment has three product groups, including silica catalysts, zeolite catalysts, and refining services. Silica catalysts product group sells both the finished catalyst and catalysts supports, for the production of high-density polyethylene (HDPE).zeolite catalysts product group is a supplier of emissions control catalysts as well as a supplier of specialty catalysts, precursors, and formulations. Performance materials and chemicals segment has two product groups, including performance materials and performance chemicals.

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