Critical Analysis: Cabot (NYSE:CBT) vs. Resonac (OTCMKTS:SHWDY)

Cabot (NYSE:CBT) and Resonac (OTCMKTS:SHWDY) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Volatility and Risk

Cabot has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, Resonac has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500.

Insider & Institutional Ownership

93.2% of Cabot shares are owned by institutional investors. 3.1% of Cabot shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Cabot pays an annual dividend of $1.89 per share and has a dividend yield of 2.1%. Resonac pays an annual dividend of $0.55 per share and has a dividend yield of 0.5%. Cabot pays out 35.7% of its earnings in the form of a dividend. Resonac pays out 44.7% 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.

Profitability

This table compares Cabot and Resonac’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cabot	7.97%	21.33%	9.48%
Resonac	2.59%	4.89%	1.65%

Analyst Ratings

This is a summary of current ratings and recommmendations for Cabot and Resonac, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cabot	1	4	2	0	2.14
Resonac	0	0	0	2	4.00

Cabot currently has a consensus target price of $85.80, suggesting a potential downside of 3.03%. Given Cabot’s higher probable upside, research analysts plainly believe Cabot is more favorable than Resonac.

Earnings and Valuation

This table compares Cabot and Resonac”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cabot	$3.71 billion	1.23	$331.00 million	$5.29	16.73
Resonac	$9.01 billion	2.30	$194.51 million	$1.23	91.03

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

Summary

Cabot beats Resonac on 13 of the 18 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 Resonac

Resonac Holdings Corporation operates as a chemical company in Japan, China, rest of Asia, and internationally. It operates through Semiconductor and Electronic Materials, Mobility, Innovation Enabling Materials, and Chemicals segments. The company offers gases and solvents, abatement systems and surface treatments, CMP slurries, and anti-charging materials; semiconductor-related materials, display and sensor-related materials, and films; base and photosensitive materials for PWBs; hard disks, SiCs, and optical semiconductors for use as electronic device components; and molded plastics/sheet-formed, powder metal, and aluminum products for automotives. It also provides lithium-ion batteries and mechanical carbon; ceramics, resins, cosmetic ingredients/medicinal additives, monomers, adhesives, tapes, and chromatography products; and elastomers. In addition, the company offers polyimides; HD media; friction materials; aluminum gravity casting products; packaging/containers for food, medicine, and electronics; electrical insulating epoxy resin molded products; zipper bags and tapes; titanium oxide and alumina; and elastic polishing grindstone. Further, it provides polypropylene and polyethylene; liquefied carbon dioxide, dry ice, and gas-related equipment; liquefied oxygen, nitrogen, and argon; molecular sieve; graphite electrodes; plasters, fireproofing pipes, and wall sidings; cement and moisture removal sheets; industrial materials; and FRP, coated sand, and separating mediums. Additionally, the company engages in the contract development and manufacturing of regenerative medicines; leasing of personal computers and other business equipment; outsourcing of salary, welfare, and finance-related business; and synthesis, analysis, and SDS preparation services. The company was formerly known as Showa Denko K.K. and changed its name to Resonac Holdings Corporation in January 2023. Resonac Holdings Corporation was incorporated in 1939 and is headquartered in Tokyo, Japan.