Critical Analysis: Akzo Nobel (OTCMKTS:AKZOY) vs. Tronox (NYSE:TROX)

Akzo Nobel (OTCMKTS:AKZOY) and Tronox (NYSE:TROX) are both 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.

Profitability

This table compares Akzo Nobel and Tronox’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Akzo Nobel	6.49%	12.77%	4.09%
Tronox	-17.96%	-24.34%	-5.51%

Analyst Ratings

This is a summary of current ratings and recommmendations for Akzo Nobel and Tronox, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Akzo Nobel	0	6	1	1	2.38
Tronox	4	4	1	0	1.67

Tronox has a consensus target price of $7.08, suggesting a potential upside of 75.11%. Given Tronox’s higher probable upside, analysts plainly believe Tronox is more favorable than Akzo Nobel.

Valuation and Earnings

This table compares Akzo Nobel and Tronox”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Akzo Nobel	$11.49 billion	0.96	$718.44 million	$1.43	14.99
Tronox	$2.90 billion	0.22	-$470.00 million	($3.46)	-1.17

Akzo Nobel has higher revenue and earnings than Tronox. Tronox is trading at a lower price-to-earnings ratio than Akzo Nobel, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Akzo Nobel has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Tronox has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Insider & Institutional Ownership

0.4% of Akzo Nobel shares are owned by institutional investors. Comparatively, 73.4% of Tronox shares are owned by institutional investors. 2.0% of Tronox 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

Akzo Nobel pays an annual dividend of $0.99 per share and has a dividend yield of 4.6%. Tronox pays an annual dividend of $0.20 per share and has a dividend yield of 4.9%. Akzo Nobel pays out 69.2% of its earnings in the form of a dividend. Tronox pays out -5.8% 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. Tronox is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Akzo Nobel beats Tronox on 11 of the 16 factors compared between the two stocks.

About Akzo Nobel

Akzo Nobel N.V. engages in the production and sale of paints and coatings worldwide. The company operates through two segments: Decorative Paints and Performance Coatings. It offers decorative paints, including paints, lacquers, and varnishes; and a range of mixing machines and color concepts for the building and renovation industry, as well as specialty coatings. The company also provides performance coatings that protect and enhance ships, cars, aircraft, yachts, architectural components, consumer goods, and oil and gas facilities. It offers its products under AkzoNobel, Alabastine, Alba, Andercol, Apla, Armstead Trade, Astral, Astral Batiment, AwlGrip, Brikol, Dulux, Bruguer, Cetabever, Cetol, Chemcraft, Colourland Paints, CONSOLAN, Coral, Cromadex, Cuprinol, Dynacoat, Flexa, Glitsa, Grip-Gard, Herbol, Hammerite, International, Interlux, Innenweis, Interpon, Inca, Luxol, Levis, Lesonal, Molto, Modern Classikk, Maxilite, Mauvilac, Mason CT, Marshall, Mactra, Nordsjo, Oxirite, Protecto, Procolor, Polyfilla, Polycell, Pinotex, Pintuco, Resicoat, Relest, Sparlack, Sadolin, Sikkens, Sea Hawk, Savana, Salcomix, Trimetal, Titanlux, Taubmans, U-tech, Vpowdertech, Vivechrom, Xylazel, Xyladecor, Wanda, and Zweihorn brands. The company serves to energy, packaging, infrastructure, and shipbuilding and maintenance industries, as well as general industries, such as agricultural and construction equipment, construction-related steel, metal fabrication, pipes, appliances, and transportation. The company was formerly known as Akzo NV and changed its name to Akzo Nobel N.V. in 1994. Akzo Nobel N.V. was founded in 1646 and is headquartered in Amsterdam, the Netherlands.

About Tronox

Tronox Holdings plc operates as a vertically integrated manufacturer of TiO2 pigment in North America, South and Central America, Europe, the Middle East, Africa, and the Asia Pacific. The company operates titanium-bearing mineral sand mines; and engages in beneficiation and smelting operations. It offers TiO2 pigment; ultrafine specialty TiO2; zircon; feedstock; pig iron; monazite; titanium tetrachloride; and other products. The company’s products are used for the manufacture of paints, coatings, plastics, and paper, as well as various other applications. Tronox Holdings plc is based in Stamford, Connecticut.