Analyzing Tredegar (NYSE:TG) and Materion (NYSE:MTRN)

Tredegar (NYSE:TG) and Materion (NYSE:MTRN) are both materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.

Profitability

This table compares Tredegar and Materion’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tredegar	4.26%	14.52%	8.07%
Materion	4.29%	13.38%	6.98%

Risk & Volatility

Tredegar has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Materion has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Valuation & Earnings

This table compares Tredegar and Materion”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tredegar	$781.74 million	0.36	$33.48 million	$0.96	8.30
Materion	$1.79 billion	2.91	$74.82 million	$4.29	58.20

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

Insider and Institutional Ownership

79.2% of Tredegar shares are held by institutional investors. Comparatively, 93.6% of Materion shares are held by institutional investors. 2.5% of Tredegar shares are held by company insiders. Comparatively, 2.8% of Materion shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Tredegar pays an annual dividend of $0.52 per share and has a dividend yield of 6.5%. Materion pays an annual dividend of $0.58 per share and has a dividend yield of 0.2%. Tredegar pays out 54.2% of its earnings in the form of a dividend. Materion pays out 13.5% 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. Materion has increased its dividend for 13 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Tredegar and Materion, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tredegar	0	1	0	0	2.00
Materion	0	1	4	0	2.80

Materion has a consensus target price of $310.00, suggesting a potential upside of 24.15%. Given Materion’s stronger consensus rating and higher possible upside, analysts clearly believe Materion is more favorable than Tredegar.

Summary

Materion beats Tredegar on 14 of the 17 factors compared between the two stocks.

About Tredegar

Tredegar Corporation manufactures and sells aluminum extrusions, polyethylene (PE) films, and plastic and polyester films in the United States and internationally. It operates through three segments: Aluminum Extrusions, PE Films, and Flexible Packaging Films. The Aluminum Extrusions segment produces soft and medium strength alloyed aluminum extrusions, custom fabricated and finished aluminum extrusions for the building and construction, automotive and transportation, consumer durables, machinery and equipment, electrical and renewable energy, and distribution markets; and manufactures mill, anodized, and painted and alloyed aluminum extrusions to fabricators and distributors. The PE Films segment offers single- and multi-layer surface protection films for protecting components of flat panel and flexible displays that are used in televisions, monitors, notebooks, smart phones, tablets, e-readers, and digital signage under the UltraMask, ForceField, ForceField PEARL, Pearl A, and Obsidian brands. This segment provides polyethylene overwrap for bathroom tissue and paper towels, as well as polyethylene overwrap films and films for other markets. The Flexible Packaging Films segment offers polyester-based films for food packaging and industrial applications under the Ecophane and Sealphane brands. Tredegar Corporation was incorporated in 1988 and is headquartered in Richmond, Virginia.

About Materion

Materion Corporation, together with its subsidiaries, produces advanced engineered materials used in semiconductor, industrial, aerospace and defense, automotive, energy, consumer electronics, and telecom and data center in the United States, Asia, Europe, and internationally. The company operates in four segments: Performance Materials, Electronic Materials, Precision Optics, and Other. The company provides advanced engineered solutions comprising beryllium and non-beryllium containing alloy systems and custom engineered parts in strip, bulk, rod, plate, bar, tube, and other customized shapes; engineering and product development services; alloyed metals, beryllium products, and beryllium hydroxide; precision strip, rod, and wire products, as well as engineered strip metal products; and ToughMet alloys and SupremEX aluminum silicon carbide metal matrix composite formulation products. It operates the bertrandite ore mine and refinery located in Utah that provides feedstock hydroxide for its beryllium businesses and external sale. In addition, it produces advanced chemicals, microelectronics packaging, precious metal, non-precious metal, and specialty metal products, including vapor deposition targets, frame lid assemblies, clad and precious metal pre-forms, high temperature braze materials, and ultra-pure wire. Further, the company designs and produces precision thin film coatings, optical filters, and assemblies. The company sells its products directly from its facilities, as well as through company-owned service centers, outside distributors, agents, direct sales offices, and independent sales representatives. The company was formerly known as Brush Engineered Materials Inc. and changed its name to Materion Corporation in March 2011. Materion Corporation was founded in 1921 and is headquartered in Mayfield Heights, Ohio.