Olin (OLN) vs. Braskem (BAK) Critical Survey

Olin (NYSE: OLN) and Braskem (NYSE:BAK) are both mid-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, risk, earnings and institutional ownership.

Dividends

Olin pays an annual dividend of $0.80 per share and has a dividend yield of 2.2%. Braskem does not pay a dividend. Olin pays out 173.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Olin and Braskem’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Olin 1.29% 6.05% 1.54%
Braskem 3.07% 28.41% 2.59%

Insider and Institutional Ownership

95.5% of Olin shares are held by institutional investors. Comparatively, 0.6% of Braskem shares are held by institutional investors. 2.9% of Olin shares are held by insiders. Comparatively, 0.0% of Braskem shares are held 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.

Risk and Volatility

Olin has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, Braskem has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Olin $5.55 billion 1.11 -$3.90 million $0.46 80.11
Braskem $13.74 billion 0.87 -$117.96 million $0.91 33.10

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

Analyst Recommendations

This is a breakdown of recent recommendations for Olin and Braskem, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Olin 0 2 6 0 2.75
Braskem 0 0 2 0 3.00

Olin currently has a consensus price target of $38.14, indicating a potential upside of 3.51%. Braskem has a consensus price target of $22.00, indicating a potential downside of 26.96%. Given Olin’s higher possible upside, equities analysts plainly believe Olin is more favorable than Braskem.

Summary

Olin beats Braskem on 9 of the 16 factors compared between the two stocks.

About Olin

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.

About Braskem

Braskem S.A. produces thermoplastic resins. The Company’s segments are Basic petrochemicals, Polyolefins, Vinyls, the United States and Europe, and Chemical distribution. It is also engaged in the import and export of chemicals, petrochemicals and fuels, the production, supply and sale of utilities such as steam, water, compressed air, industrial gases, the provision of industrial services, and the production, supply and sale of electric energy. It also invests in other companies, either as a partner or as shareholder. It operates over 40 industrial units, over 30 of which are located in the Brazilian states of Alagoas, Bahia, Rio de Janeiro, Rio Grande do Sul and Sao Paulo; over five are located in the United States, in the states of Pennsylvania, Texas and West Virginia, and over two are located in Germany, in the cities of Wesseling and Schkopau. These units produce thermoplastic resins–polyethylene, polypropylene and polyvinyl chloride, as well as basic petrochemicals.

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