Financial Analysis: LyondellBasell Industries (NYSE:LYB) versus Sumitomo Chemcl (OTCMKTS:SOMMY)

Sumitomo Chemcl (OTCMKTS:SOMMY) and LyondellBasell Industries (NYSE:LYB) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, dividends, institutional ownership and risk.

Institutional and Insider Ownership

71.2% of LyondellBasell Industries shares are owned by institutional investors. 0.1% of LyondellBasell Industries shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Sumitomo Chemcl and LyondellBasell Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sumitomo Chemcl	0.35%	0.80%	0.25%
LyondellBasell Industries	0.74%	9.35%	3.28%

Dividends

Sumitomo Chemcl pays an annual dividend of $0.28 per share and has a dividend yield of 2.0%. LyondellBasell Industries pays an annual dividend of $5.48 per share and has a dividend yield of 12.8%. Sumitomo Chemcl pays out 16.2% of its earnings in the form of a dividend. LyondellBasell Industries pays out -146.1% 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. LyondellBasell Industries has increased its dividend for 14 consecutive years. LyondellBasell Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Sumitomo Chemcl has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500. Comparatively, LyondellBasell Industries has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sumitomo Chemcl and LyondellBasell Industries”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumitomo Chemcl	$17.12 billion	0.27	$254.70 million	$1.73	8.10
LyondellBasell Industries	$35.25 billion	0.39	$1.37 billion	($3.75)	-11.44

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Sumitomo Chemcl and LyondellBasell Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumitomo Chemcl	0	1	0	0	2.00
LyondellBasell Industries	4	12	3	1	2.05

LyondellBasell Industries has a consensus price target of $57.69, suggesting a potential upside of 34.45%. Given LyondellBasell Industries’ stronger consensus rating and higher probable upside, analysts plainly believe LyondellBasell Industries is more favorable than Sumitomo Chemcl.

Summary

LyondellBasell Industries beats Sumitomo Chemcl on 16 of the 18 factors compared between the two stocks.

About Sumitomo Chemcl

Sumitomo Chemical Company, Limited engages in Chemicals & Plastics, energy and functional materials, IT-related chemicals, health and crop sciences, pharmaceuticals, and other businesses worldwide. Its Essential Chemicals & Plastics segment offers synthetic resins, such as polyethylene, polypropylene, and polymethyl methacrylate resins; raw materials for synthetic fibers; and various industrial chemicals. The company's Energy & Functional Materials segment provides alumina and aluminum products used for energy products; resorcinol for tires, wood adhesives, flame retardants, and ultraviolet ray absorbants; polymer additives and rubber chemicals; synthetic rubber for tires, shoes, construction materials, and other applications; and engineering plastics and lithium-ion secondary battery materials for use in electronic components and next-generation vehicles. Its IT-Related Chemicals segment provides polarizing films, touch screen sensor panels, and color resists and polymer OLED for LC and OLED displays; photoresists and high-purity chemicals for the semiconductor manufacturing process; and compound semiconductor materials for antenna switches and other components of communication terminal equipment. The company's Health & Crop Sciences segment offers crop protection chemicals, fertilizers, feed additives, and household insecticides; active pharmaceutical ingredients and intermediates; and products to control infectious diseases. Its Pharmaceuticals segment provides prescription and diagnostic pharmaceuticals. The company's Others segment supplies electric power and steam; designs, constructs, and supervises chemical plants; provides transportation and warehousing services; and conducts physical property and environmental analysis. Sumitomo Chemical Company, Limited was founded in 1913 and is headquartered in Tokyo, Japan.

About LyondellBasell Industries

LyondellBasell Industries N.V. operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and PolyolefinsAmericas; Olefins and PolyolefinsEurope, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyethylene, and polypropylene; and propylene oxide and derivatives; oxyfuels and related products; and intermediate chemicals, such as styrene monomer, acetyls, ethylene oxide, and ethylene glycol. In addition, the company produce and markets compounding and solutions including polypropylene compounds, engineered plastics, masterbatches, engineered composites, colors and powders, and advanced polymers including catalloy and polybutene-1; and refines heavy, high-sulfur crude oil and other crude oils, as well as refined products, including gasoline and distillates. Further, it develops and licenses chemical and polyolefin process technologies; manufactures and sells polyolefin catalysts; and serves food packaging, home furnishings, automotive components, and paints and coatings applications. LyondellBasell Industries N.V. was incorporated in 2009 and is headquartered in Houston, Texas.