Reviewing RPM International (NYSE:RPM) and Sensient Technologies (NYSE:SXT)

Sensient Technologies (NYSE:SXT) and RPM International (NYSE:RPM) are both basic materials companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Volatility & Risk

Sensient Technologies has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500. Comparatively, RPM International has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares Sensient Technologies and RPM International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sensient Technologies	8.71%	13.12%	6.97%
RPM International	8.63%	22.55%	8.75%

Dividends

Sensient Technologies pays an annual dividend of $1.64 per share and has a dividend yield of 1.3%. RPM International pays an annual dividend of $2.16 per share and has a dividend yield of 1.9%. Sensient Technologies pays out 48.4% of its earnings in the form of a dividend. RPM International pays out 41.6% 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. RPM International has raised its dividend for 51 consecutive years. RPM International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings for Sensient Technologies and RPM International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sensient Technologies	0	1	2	0	2.67
RPM International	0	4	11	0	2.73

Sensient Technologies currently has a consensus price target of $143.00, suggesting a potential upside of 14.80%. RPM International has a consensus price target of $127.42, suggesting a potential upside of 14.16%. Given Sensient Technologies’ higher possible upside, research analysts plainly believe Sensient Technologies is more favorable than RPM International.

Institutional and Insider Ownership

90.9% of Sensient Technologies shares are held by institutional investors. Comparatively, 80.9% of RPM International shares are held by institutional investors. 1.3% of Sensient Technologies shares are held by company insiders. Comparatively, 1.6% of RPM International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Sensient Technologies and RPM International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sensient Technologies	$1.61 billion	3.29	$134.49 million	$3.39	36.75
RPM International	$7.37 billion	1.93	$688.69 million	$5.19	21.51

RPM International has higher revenue and earnings than Sensient Technologies. RPM International is trading at a lower price-to-earnings ratio than Sensient Technologies, indicating that it is currently the more affordable of the two stocks.

Summary

RPM International beats Sensient Technologies on 12 of the 17 factors compared between the two stocks.

About Sensient Technologies

Sensient Technologies Corporation, together with its subsidiaries, develops, manufactures, and markets colors, flavors, and other specialty ingredients in North America, Europe, Asia, Australia, South America, and Africa. The company offers flavor-delivery systems, and compounded and blended products; ingredient products, such as essential oils, natural and synthetic flavors, and natural extracts; and chili powder, paprika, and chili pepper, as well as dehydrated vegetables comprising parsley, celery, and spinach to the food, beverage, and personal care industries. It also provides natural and synthetic color systems for use in foods, beverages, pharmaceuticals, and nutraceuticals; colors and other ingredients for personal care, such as active ingredients, solubilizers, and surface treated pigments; pharmaceutical and nutraceutical excipients, including colors, flavors, coatings, and nutraceutical ingredients; and technical colors for industrial applications under the Sensient Food Colors, Sensient Pharmaceutical Coating Systems, Sensient Cosmetic Technologies, and Sensient Specialty Markets trade names. Sensient Technologies Corporation was incorporated in 1882 and is headquartered in Milwaukee, Wisconsin.

About RPM International

RPM International Inc. manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. It offers waterproofing, coating, and traditional roofing systems; sealants, air barriers, tapes, and foams; residential home weatherization systems; roofing and building maintenance services; sealing and bonding, subfloor preparation, flooring, and glazing solutions; resin flooring systems, polyurethane, MMA waterproof, epoxy floor paint and coatings, concrete repair, and protection products; fire stopping and intumescent steel coating, and manufacturing industry solutions; rolled asphalt roofing materials and chemical admixtures; concrete and masonry admixtures, concrete fibers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, injection resins, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and restoration materials; insulated building cladding materials; and concrete form wall systems. It also provides polymer flooring systems; fiberglass reinforced plastic gratings and shapes; corrosion-control coating, containment and railcar lining, fire and sound proofing, and heat and cryogenic insulation products; specialty construction products; amine curing agents, reactive diluents, and epoxy resins; fluorescent colorants and pigments; shellac-based-specialty and marine coatings; fire and water damage restoration, carpet cleaning, and disinfecting products; fuel additives; wood treatments, coatings, and touch-up products; and nail enamels, polishes, and coating components. In addition, it offers solutions for the paint contractors and DIYers, concrete restoration and flooring, metallic and faux finish coatings, cleaners, and hobby paints and cements; and caulks, adhesives, insulating foams, and patches, as well as spackling, glazing, and repair products. The company was incorporated in 1947 and is headquartered in Medina, Ohio.