Cabot (NYSE:CBT – Get Free Report) and Shin-Etsu Chemical (OTCMKTS:SHECY – Get Free Report) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.
Profitability
This table compares Cabot and Shin-Etsu Chemical’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cabot | 11.14% | 25.68% | 10.92% |
| Shin-Etsu Chemical | 19.94% | 10.90% | 9.31% |
Analyst Ratings
This is a breakdown of current recommendations and price targets for Cabot and Shin-Etsu Chemical, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cabot | 1 | 1 | 1 | 0 | 2.00 |
| Shin-Etsu Chemical | 1 | 0 | 0 | 0 | 1.00 |
Valuation & Earnings
This table compares Cabot and Shin-Etsu Chemical”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Cabot | $3.99 billion | 1.02 | $380.00 million | $7.65 | 9.97 |
| Shin-Etsu Chemical | $16.82 billion | 3.77 | $3.56 billion | $0.88 | 18.15 |
Shin-Etsu Chemical has higher revenue and earnings than Cabot. Cabot is trading at a lower price-to-earnings ratio than Shin-Etsu Chemical, indicating that it is currently the more affordable of the two stocks.
Dividends
Cabot pays an annual dividend of $1.80 per share and has a dividend yield of 2.4%. Shin-Etsu Chemical pays an annual dividend of $0.25 per share and has a dividend yield of 1.6%. Cabot pays out 23.5% of its earnings in the form of a dividend. Shin-Etsu Chemical pays out 28.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Cabot has raised its dividend for 14 consecutive years. Cabot is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider & Institutional Ownership
93.2% of Cabot shares are held by institutional investors. Comparatively, 0.0% of Shin-Etsu Chemical shares are held by institutional investors. 3.0% of Cabot shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Volatility and Risk
Cabot has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500. Comparatively, Shin-Etsu Chemical has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.
Summary
Cabot beats Shin-Etsu Chemical on 11 of the 17 factors compared between the two stocks.
About Cabot
Cabot Corporation operates as a specialty chemicals and performance materials company. The company operates through two segments, Reinforcement Materials and Performance Chemicals. It offers reinforcing carbons that are used in tires as a rubber reinforcing agent and performance additive, as well as in industrial products, such as hoses, belts, extruded profiles, and molded goods; and engineered elastomer composites solutions. The company also provides specialty carbons for use in inks, coatings, plastics, adhesives, toners, batteries, and displays; conductive additives and fumed alumina used in lead acid and lithium-ion batteries for electric vehicles; fumed silica used in adhesives, sealants, cosmetics, batteries, inks, toners, silicone elastomers, coatings, polishing slurries, and pharmaceuticals; and fumed alumina for use in various products, including inkjet media, lighting, coatings, cosmetics, and polishing slurries. In addition, it offers aerogel, a hydrophobic, silica-based particle to use in various thermal insulation and specialty chemical applications; masterbatch and conductive compound products that are used in automotive, industrial, packaging, infrastructure, agriculture, consumer products, and electronics industries; and inkjet colorants for inkjet printing applications. The company sells its products through distributors and sales representatives in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. Cabot Corporation was founded in 1882 and is headquartered in Boston, Massachusetts.
About Shin-Etsu Chemical
Shin-Etsu Chemical Co., Ltd. provides infrastructure, electronics, and functional materials in Japan. It is also involved in processing and specialized related services. The company operates through Infrastructure Materials; Electronics Materials; Functional Materials; and Processing and Specialized Services segments. In addition, it offers cellulose derivatives, synthetic pheromones, aroma chemicals, dielectric and LED/ semiconductor materials, silanes, photoresists, chlorides, caustic soda, liquid fluoroelastomers, polyvinyl chloride and vinyl acetate resin, silicones, and silicones processed goods. Further, the company offers pellicles, photomask blanks, synthetic quartz/ quartz cloth, pyrolytic boron nitride, LIB anode material, and silicon metal. Additionally, it provides rare earth magnets, compound semiconductors, and oxide single crystals. The company was formerly known as Shin-Etsu Nitrogen Fertilizer Co., Ltd. and changed its name to Shin-Etsu Chemical Co., Ltd. in 1940. Shin-Etsu Chemical Co., Ltd. was incorporated in 1926 and is headquartered in Tokyo, Japan.
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