NewMarket Corporation (NEU) vs. Its Rivals Critical Analysis

NewMarket Corporation (NYSE: NEU) is one of 35 publicly-traded companies in the “Commodity Chemicals” industry, but how does it contrast to its peers? We will compare NewMarket Corporation to similar companies based on the strength of its risk, analyst recommendations, institutional ownership, profitability, earnings, dividends and valuation.

Volatility and Risk

NewMarket Corporation has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, NewMarket Corporation’s peers have a beta of 1.16, suggesting that their average stock price is 16% more volatile than the S&P 500.

Valuation and Earnings

This table compares NewMarket Corporation and its peers gross revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
NewMarket Corporation $2.11 billion $402.53 million 20.34
NewMarket Corporation Competitors $4.37 billion $978.27 million 29.06

NewMarket Corporation’s peers have higher revenue and earnings than NewMarket Corporation. NewMarket Corporation is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares NewMarket Corporation and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewMarket Corporation 11.57% 46.94% 16.19%
NewMarket Corporation Competitors -27.97% 23.83% 5.35%

Dividends

NewMarket Corporation pays an annual dividend of $7.00 per share and has a dividend yield of 1.7%. NewMarket Corporation pays out 34.0% of its earnings in the form of a dividend. As a group, “Commodity Chemicals” companies pay a dividend yield of 2.0% and pay out 55.0% of their earnings in the form of a dividend. NewMarket Corporation has increased its dividend for 8 consecutive years.

Insider and Institutional Ownership

55.3% of NewMarket Corporation shares are held by institutional investors. Comparatively, 69.9% of shares of all “Commodity Chemicals” companies are held by institutional investors. 16.8% of NewMarket Corporation shares are held by company insiders. Comparatively, 7.9% of shares of all “Commodity Chemicals” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for NewMarket Corporation and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewMarket Corporation 0 1 0 0 2.00
NewMarket Corporation Competitors 188 995 1266 55 2.47

As a group, “Commodity Chemicals” companies have a potential upside of 1.45%. Given NewMarket Corporation’s peers stronger consensus rating and higher probable upside, analysts clearly believe NewMarket Corporation has less favorable growth aspects than its peers.

Summary

NewMarket Corporation peers beat NewMarket Corporation on 10 of the 15 factors compared.

About NewMarket Corporation

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.

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