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KMG Chemicals (NYSE:KMG) & Kronos Worldwide (KRO) Critical Review

KMG Chemicals (NYSE: KMG) and Kronos Worldwide (NYSE:KRO) are both basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitabiliy, earnings, institutional ownership, valuation and risk. Institutional and Insider Ownership

71.2% of KMG Chemicals shares are owned by institutional investors. Comparatively, 14.4% of Kronos Worldwide shares are owned by institutional investors.

6.9% of KMG Chemicals shares are owned by insiders. Comparatively, 0.1% of Kronos Worldwide shares are owned by insiders.

Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth. Analyst Ratings This is a summary of recent ratings and price targets for KMG Chemicals and Kronos Worldwide, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KMG Chemicals 0 0 1 0 3.00
Kronos Worldwide 1 1 0 0 1.50

KMG Chemicals currently has a consensus target price of £37.00, suggesting a potential downside of 25.79%.

Kronos Worldwide has a consensus target price of £12.00, suggesting a potential downside of 42.61%. Given KMG Chemicals’ stronger consensus rating and higher possible upside, equities research analysts plainly believe KMG Chemicals is more favorable than Kronos Worldwide. Volatility and Risk

KMG Chemicals has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, Kronos Worldwide has a beta of 2.1, indicating that its stock price is 110% more volatile than the S&P 500. Earnings and Valuation

This table compares KMG Chemicals and Kronos Worldwide’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
KMG Chemicals £312.48 million 1.90 £51.47 million £1.80 27.70
Kronos Worldwide £1.42 billion 1.71 £174.70 million £0.72 29.04

Kronos Worldwide has higher revenue and earnings than KMG Chemicals. KMG Chemicals is trading at a lower price-to-earnings ratio than Kronos Worldwide, indicating that it is currently the more affordable of the two stocks. Profitability

This table compares KMG Chemicals and Kronos Worldwide’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KMG Chemicals 7.05% 15.66% 9.75%
Kronos Worldwide 9.95% 35.92% 12.06%

Dividends KMG Chemicals pays an annual dividend of £0.12 per share and has a dividend yield of 0.2%. Kronos Worldwide pays an annual dividend of £0.60 per share and has a dividend yield of 2.9%.

KMG Chemicals pays out 6.7% of its earnings in the form of a dividend. Kronos Worldwide pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. About KMG Chemicals

KMG Chemicals logoKMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals.

The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business.

The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals. About Kronos Worldwide Kronos Worldwide logoKronos Worldwide, Inc. (Kronos) is a producer and marketer of titanium dioxide (TiO2) pigments, a base industrial product that is used in a range of applications.

The Company, along with its distributors and agents, sells and provides technical services for its products with sales in Europe and North America. It offers its customers a portfolio of products that include TiO2 pigment grades under the Kronos brand, which provides a range of performance properties. It offers its products to domestic and international paint, plastics, decorative laminate and paper manufacturers.

It ships TiO2 to its customers in either a powder or slurry form through rail, truck or ocean carrier. It sells and provides technical services for its products in three end use markets, which include coatings, plastics and paper. It produces TiO2 in two crystalline forms, which include rutile and anatase.

Rutile TiO2 is manufactured using both a chloride production process and a sulfate production process.

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References

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