Contrasting Westaim (OTCMKTS:WEDXF) & 3M (NYSE:MMM)

Westaim (OTCMKTS:WEDXF) and 3M (NYSE:MMM) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Profitability

This table compares Westaim and 3M’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Westaim	1,323.83%	22.34%	20.94%
3M	3.08%	112.92%	10.52%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Westaim and 3M, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westaim	0	0	0	0	N/A
3M	1	5	8	0	2.50

3M has a consensus target price of $123.57, indicating a potential downside of 4.38%. Given 3M’s higher possible upside, analysts clearly believe 3M is more favorable than Westaim.

Dividends

Westaim pays an annual dividend of $0.09 per share and has a dividend yield of 3.1%. 3M pays an annual dividend of $2.80 per share and has a dividend yield of 2.2%. Westaim pays out 11.1% of its earnings in the form of a dividend. 3M pays out -22.0% 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. 3M has raised its dividend for 67 consecutive years.

Volatility and Risk

Westaim has a beta of 0.51, meaning that its stock price is 49% less volatile than the S&P 500. Comparatively, 3M has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500.

Earnings and Valuation

This table compares Westaim and 3M’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westaim	$8.63 million	43.37	$183.98 million	$0.81	3.60
3M	$32.61 billion	2.19	-$7.00 billion	($12.72)	-10.16

Westaim has higher earnings, but lower revenue than 3M. 3M is trading at a lower price-to-earnings ratio than Westaim, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

65.3% of 3M shares are owned by institutional investors. 4.2% of Westaim shares are owned by company insiders. Comparatively, 0.3% of 3M shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

About Westaim

The Westaim Corporation is a private equity firm specializing in direct and indirect investments through acquisitions, joint ventures, secondary investments both direct and indirect, fund of fund investments, and other arrangements. For direct investments, the firm invests in early venture, mid venture, late venture, middle market, later stage, mature, emerging growth, PIPEs, and buyout transactions. For fund of fund investments, it seeks to invest in private equity funds, venture capital funds, and hedge funds. The firm seeks to provide long term capital to businesses operating in the global financial services industry. It typically acquires controlling interests in businesses. The firm seeks to acquire debt, equity, or derivative securities of both public and private companies. It invests with the objective of providing its shareholders with capital appreciation and real wealth preservation. The firm seeks to provide its portfolio companies with advisory services including, but not limited to, advice on capital allocation, financing strategy, performance measurement and merger and acquisition support. It also seeks to partner with like-minded providers of third party capital to help supplement the firm's own capital, when completing acquisitions. The firm generally seeks to hold its investments for seven to 15 years. The Westaim Corporation was founded in 1996 and is based in Toronto, Canada.

About 3M

3M Company provides diversified technology services in the United States and internationally. The company's Safety and Industrial segment offers industrial abrasives and finishing for metalworking applications; autobody repair solutions; closure systems for personal hygiene products, masking, and packaging materials; electrical products and materials for construction and maintenance, power distribution, and electrical original equipment manufacturers; structural adhesives and tapes; respiratory, hearing, eye, and fall protection solutions; and natural and color-coated mineral granules for shingles. Its Transportation and Electronics segment provides ceramic solutions; attachment/bonding products, films, sound, and temperature management for transportation vehicles; premium large format graphic films for advertising and fleet signage; light management films and electronics assembly solutions; packaging and interconnection solutions; semiconductor production materials; data centers solutions; and reflective signage for highway, and vehicle safety. The company's Consumer segment provides consumer bandages, braces, supports, and consumer respirators; home cleaning products; retail abrasives, paint accessories, car care DIY products, picture hanging, and consumer air quality solutions; and stationery products. It offers its products through e-commerce and traditional wholesalers, retailers, jobbers, distributors, and dealers. 3M Company was founded in 1902 and is headquartered in Saint Paul, Minnesota.