Critical Analysis: Koppers Holdings (KOP) versus Olin Corporation (OLN)

Koppers Holdings (NYSE: KOP) and Olin Corporation (NYSE:OLN) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Volatility & Risk

Koppers Holdings has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, Olin Corporation has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500.

Dividends

Olin Corporation pays an annual dividend of $0.80 per share and has a dividend yield of 2.7%. Koppers Holdings does not pay a dividend. Olin Corporation pays out 320.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Olin Corporation has raised its dividend for 5 consecutive years.

Earnings & Valuation

This table compares Koppers Holdings and Olin Corporation’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Koppers Holdings	$1.41 billion	0.56	$169.90 million	$1.98	19.24
Olin Corporation	$5.93 billion	0.84	$842.90 million	$0.25	119.96

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

Profitability

This table compares Koppers Holdings and Olin Corporation’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Koppers Holdings	3.02%	153.51%	6.24%
Olin Corporation	0.72%	5.80%	1.51%

Analyst Recommendations

This is a breakdown of current ratings for Koppers Holdings and Olin Corporation, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Koppers Holdings	0	1	3	0	2.75
Olin Corporation	0	2	4	0	2.67

Koppers Holdings presently has a consensus target price of $45.75, indicating a potential upside of 20.08%. Olin Corporation has a consensus target price of $32.67, indicating a potential upside of 8.93%. Given Koppers Holdings’ stronger consensus rating and higher probable upside, equities analysts clearly believe Koppers Holdings is more favorable than Olin Corporation.

Insider and Institutional Ownership

90.7% of Koppers Holdings shares are owned by institutional investors. Comparatively, 93.0% of Olin Corporation shares are owned by institutional investors. 3.9% of Koppers Holdings shares are owned by company insiders. Comparatively, 2.9% of Olin Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Olin Corporation beats Koppers Holdings on 9 of the 17 factors compared between the two stocks.

About Koppers Holdings

Koppers Holdings Inc. is a global integrated provider of treated wood products, wood treatment chemicals and carbon compounds. The Company operates through three segments: Railroad and Utility Products and Services (RUPS), Carbon Materials and Chemicals (CMC) and Performance Chemicals (PC). The RUPS business sells treated and untreated wood products, rail joint bars and services primarily to the railroad markets. The primary products supplied by PC business are copper-based wood preservatives, including micronized copper quaternary and micronized copper azole (MicroPro), micronized pigments (MicroShades) and chromated copper arsenate. Through CMC business, the Company processes coal tar into a range of products, including carbon pitch, creosote and carbon black feedstock. Its products and services are used in a range of markets, including the railroad, specialty chemical, utility, residential lumber, agriculture, aluminum, steel, rubber and construction industries.

About Olin Corporation

Olin Corporation is a manufacturer and distributor of chemical products, and ammunition. The Company operates through three segments: Chlor Alkali Products and Vinyls, Epoxy and Winchester. The Chlor Alkali Products and Vinyls segment manufactures and sells chlorine and caustic soda, ethylene dichloride and vinyl chloride monomer, methyl chloride, methylene chloride, chloroform, carbon tetrachloride, perchloroethylene, trichloroethylene and vinylidene chloride, hydrochloric acid, hydrogen, bleach products and potassium hydroxide. The Epoxy segment produces and sells a range of epoxy materials, including allyl chloride, epichlorohydrin, liquid epoxy resins and downstream products, such as converted epoxy resins and additives. The Winchester segment produces and sells sporting ammunition, reloading components, small caliber military ammunition and components, and industrial cartridges.