Critical Survey: SMC (OTCMKTS:SMCAY) and Brenntag (OTCMKTS:BNTGY)

Brenntag (OTCMKTS:BNTGY) and SMC (OTCMKTS:SMCAY) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, risk, institutional ownership, valuation, dividends and earnings.

Profitability

This table compares Brenntag and SMC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brenntag	3.93%	14.38%	6.09%
SMC	22.38%	9.26%	8.28%

Dividends

Brenntag pays an annual dividend of $0.01 per share and has a dividend yield of 0.1%. SMC pays an annual dividend of $0.21 per share and has a dividend yield of 0.9%. Brenntag pays out 1.1% of its earnings in the form of a dividend. SMC pays out 22.1% 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.

Insider & Institutional Ownership

1.0% of SMC shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Brenntag has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500. Comparatively, SMC has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500.

Valuation & Earnings

This table compares Brenntag and SMC’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brenntag	$18.20 billion	0.57	$773.74 million	$0.94	15.37
SMC	$5.38 billion	N/A	$1.24 billion	$0.95	24.53

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

Analyst Recommendations

This is a summary of recent recommendations for Brenntag and SMC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brenntag	0	1	0	0	2.00
SMC	0	0	0	0	N/A

Summary

SMC beats Brenntag on 7 of the 11 factors compared between the two stocks.

About Brenntag

Brenntag SE purchases and supplies various industrial and specialty chemicals, and ingredients in Germany, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates in two segments, Brenntag Essentials and Brenntag Specialties. It provides just-in-time delivery, product mixing, blending, repackaging, inventory management, and drum return handling. The company serves customers in various end-market industries, including nutrition, pharma, personal care, water treatment, and lubricants; and home, industrial, and institutional markets, as well as coatings and constructions, polymers, and rubber industries. The company was founded in 1874 and is based in Essen, Germany.

About SMC

SMC Corporation manufactures, processes, and sells automatic control equipment, sintered filters, and various types of filtration equipment worldwide. The company offers air management system, directional control valves, air cylinders, rotatory actuators/air grippers, electric actuators/cylinders, fitting and tubing, and modular F.R.L./pressure control equipment, as well as vacuum, air preparation, and lubrication equipment. It also provides flow control equipment, speed controllers, silencers/exhaust/blow guns/pressure gauges, switches/sensors/controllers, static neutralization equipment, and industrial device communication equipment/wireless system. In addition, the company offers process valves, chemical liquid valves/fittings and needle valves/tubing, process pumps, temperature control equipment, and process gas equipment, as well as high vacuum equipment, industrial filters/sintered metal elements, and pneumatic instrumentation and hydraulic equipment. The company was formerly known as Shoketsu Kinzoku Kogyo Co., Ltd. and changed its name to SMC Corporation in April 1986. SMC Corporation was incorporated in 1959 and is headquartered in Tokyo, Japan.