Stepan (NYSE:SCL) & Oil-Dri Corporation Of America (NYSE:ODC) Financial Analysis

Oil-Dri Corporation Of America (NYSE:ODC) and Stepan (NYSE:SCL) are both small-cap basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.

Dividends

Oil-Dri Corporation Of America pays an annual dividend of $0.82 per share and has a dividend yield of 1.0%. Stepan pays an annual dividend of $1.58 per share and has a dividend yield of 3.1%. Oil-Dri Corporation Of America pays out 22.2% of its earnings in the form of a dividend. Stepan pays out -254.8% 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. Oil-Dri Corporation Of America has increased its dividend for 11 consecutive years and Stepan has increased its dividend for 57 consecutive years. Stepan is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations for Oil-Dri Corporation Of America and Stepan, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oil-Dri Corporation Of America	0	0	1	0	3.00
Stepan	2	0	0	0	1.00

Insider and Institutional Ownership

49.0% of Oil-Dri Corporation Of America shares are owned by institutional investors. Comparatively, 82.7% of Stepan shares are owned by institutional investors. 11.7% of Oil-Dri Corporation Of America shares are owned by insiders. Comparatively, 6.6% of Stepan shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Oil-Dri Corporation Of America has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Stepan has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Profitability

This table compares Oil-Dri Corporation Of America and Stepan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oil-Dri Corporation Of America	11.01%	20.18%	13.78%
Stepan	-0.61%	2.65%	1.37%

Valuation and Earnings

This table compares Oil-Dri Corporation Of America and Stepan”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oil-Dri Corporation Of America	$485.57 million	2.33	$54.00 million	$3.69	21.20
Stepan	$2.33 billion	0.49	$46.90 million	($0.62)	-81.37

Oil-Dri Corporation Of America has higher earnings, but lower revenue than Stepan. Stepan is trading at a lower price-to-earnings ratio than Oil-Dri Corporation Of America, indicating that it is currently the more affordable of the two stocks.

Summary

Oil-Dri Corporation Of America beats Stepan on 10 of the 16 factors compared between the two stocks.

About Oil-Dri Corporation Of America

Oil-Dri Corporation of America is a manufacturer and supplier of specialty sorbent products for the pet care, animal health and nutrition, fluids purification, agricultural ingredients, sports field, industrial and automotive markets. It operates through the Business to Business Products Group and Retail and Wholesale Products Group segments. The Business to Business Products Group segment’s customers include processors and refiners of edible oils, jet fuel and biofuel, manufacturers of animal feed and agricultural chemicals, distributors of animal health and nutrition products, and marketers of consumer products. The Retail and Wholesale Products Group segment customers include retailers of cat litter and related accessories such as mass merchandisers, drugstore chains, pet specialty retail outlets, dollar stores, retail grocery stores as well as distributors of industrial cleanup and automotive products, environmental service companies, and sports field product users. The company was founded by Nick Jaffee in 1941 and is headquartered in Chicago, IL.

About Stepan

Stepan Company, together with its subsidiaries, produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products worldwide. It operates through three segments: Surfactants, Polymers, and Specialty Products. The Surfactants segment offers surfactants that are used in consumer and industrial cleaning and disinfection products, including detergents for washing clothes, dishes, carpets, and floors and walls, as well as shampoos and body washes; and other applications, such as fabric softeners, germicidal quaternary compounds, disinfectants, and lubricating ingredients. Its surfactants are also used in various applications, including emulsifiers for spreading agricultural products; and industrial applications comprising latex systems, plastics, and composites. The Polymers segment provides polyurethane polyols that are used in the manufacture of rigid foam for thermal insulation in the construction industry, as well as a base raw material for coatings, adhesives, sealants, and elastomers (CASE); polyester resins, including liquid and powdered products, which are used in CASE applications; and phthalic anhydride that is used in unsaturated polyester resins, alkyd resins, and plasticizers for applications in construction materials, as well as components of automotive, boating, and other consumer products. The Specialty Products segment offers flavors, emulsifiers, and solubilizers for use in food, flavoring, nutritional supplement, and pharmaceutical applications. Stepan Company was founded in 1932 and is headquartered in Northbrook, Illinois.