Critical Survey: Huntsman (HUN) versus Kraton (KRA)

Huntsman (NYSE: HUN) and Kraton (NYSE:KRA) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, analyst recommendations, profitability, dividends and earnings.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Huntsman and Kraton, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Huntsman 0 1 9 0 2.90
Kraton 0 1 2 0 2.67

Huntsman presently has a consensus target price of $32.78, suggesting a potential upside of 3.33%. Kraton has a consensus target price of $60.00, suggesting a potential upside of 26.42%. Given Kraton’s higher probable upside, analysts plainly believe Kraton is more favorable than Huntsman.

Profitability

This table compares Huntsman and Kraton’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Huntsman 5.37% 30.64% 6.06%
Kraton 1.27% 14.19% 2.56%

Volatility & Risk

Huntsman has a beta of 2.85, suggesting that its share price is 185% more volatile than the S&P 500. Comparatively, Kraton has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Insider & Institutional Ownership

75.5% of Huntsman shares are owned by institutional investors. Comparatively, 97.5% of Kraton shares are owned by institutional investors. 19.0% of Huntsman shares are owned by insiders. Comparatively, 4.7% of Kraton shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Huntsman and Kraton’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Huntsman $9.66 billion 0.79 $326.00 million $2.13 14.89
Kraton $1.74 billion 0.85 $107.30 million $0.76 62.45

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

Dividends

Huntsman pays an annual dividend of $0.50 per share and has a dividend yield of 1.6%. Kraton does not pay a dividend. Huntsman pays out 23.5% of its earnings in the form of a dividend.

Summary

Huntsman beats Kraton on 11 of the 16 factors compared between the two stocks.

Huntsman Company Profile

Huntsman Corporation is a manufacturer of differentiated organic chemical products and of inorganic chemical products. The Company operates all of its businesses through its subsidiary, Huntsman International LLC (Huntsman International). The Company operates through five segments: Polyurethanes, Performance Products, Advanced Materials, Textile Effects, and Pigments and Additives. Its Polyurethanes, Performance Products, Advanced Materials and Textile Effects segments produce differentiated organic chemical products and its Pigments and Additives segment produces inorganic chemical products. The Company’s products are used in a range of applications, including those in the adhesives, aerospace, automotive, construction products, personal care and hygiene, durable and non-durable consumer products, digital inks, electronics, medical, packaging, paints and coatings, power generation, refining, synthetic fiber, textile chemicals and dye industries.

Kraton Company Profile

Kraton Corporation, formerly Kraton Performance Polymers, Inc., is a specialty chemicals company. The Company manufactures styrenic block copolymers (SBCs) and other engineered polymers. The Company also produces specialty products primarily derived from pine wood pulping co-products. The Company operates through two segments: Polymer Segment, which comprises SBCs and other engineered polymers business, and Chemical Segment, which comprises pine-based specialty products business. Its SBCs are used in a range of applications, including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, paving, roofing and footwear products. The Company also sells isoprene rubber (IR) and isoprene rubber latex (IRL), which are non-SBC products primarily used in applications, such as medical products, personal care, adhesives, tackifiers, paints and coatings. It offers crude tall oil (CTO) and crude sulfate turpentine (CST).

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