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Digital technologies and advanced analytics are revolutionizing the chemical industry, which will drive the growth of chemical giants NewMarket (NEU) and Sigma Lithium (SGML). However, let’s compare the fundamentals of these two stocks to identify which one is the better investment. read.
While the economic slowdown and soaring prices continue to put pressure on the global chemical industry, chemical companies are embracing digital transformation to improve operational efficiency, optimize supply chains and develop innovative products and services. I’m here.
In this article, NewMarket Corporation (NEU) and Brazil-based Sigma Lithium Corporation (SGML), making better investment decisions. Based on a basic comparison of these stocks, I believe NEU is the better buy for the reasons explained throughout this article.
Furthermore, despite the current macroeconomic volatility in the chemical industry, chemical companies continue to: a more sustainable world By embracing sustainability, driving innovation, pursuing strategic partnerships and focusing on resilience.
Both NEU and SGML have risen 24.8% over the past six months. NEU closed last trade at $396.64 and SGML closed at $38.01.
Here’s why I think NEU will perform better in the short term.
Recent financial results
NEU net sales for the first quarter of the fiscal year ended March 31, 2023 were $702.79 million, an increase of 11.1% from the same period last year. Gross profit increased 27.6% year-on-year to $198.04 million, Operating income Sales increased 50.1% year-on-year to $125.04 million.
NEU net income and EPS increased 64.5% and 75.5% year-over-year to $97.58 million and $10.09, respectively.
SGML has announced a delay in filing its Annual Information Form and audited financial statements for the year ending December 31, 2022.
For the third quarter of the fiscal year ended September 30, 2022, SGML’s net loss increased 20.4% year-on-year to C$13.13 million ($9.64 million). Net loss and comprehensive loss for the quarter expanded 15.2% year-on-year to C$13.19 million ($9.69 million). Additionally, net loss per share increased 8.3% year-over-year to $0.13 Canadian.
Profitability
NEU’s forward ROCE of 40.05% is higher than SGML’s negative 50.87%. NEU forward ROTC is 15.41%, higher than SGML’s -31.02%. Furthermore, NEU’s forward ROTA of 13.52% is higher than SGML’s minus 12.60%.
Therefore, NEU is more profitable.
Dividend payment history
SGML does not pay a dividend, but NEU’s annual dividend of $9 equates to a 2.27% yield at current price levels. The four-year average dividend yield is 2.16%. The company’s dividend has increased at his CAGR of 4.1% and 3.7% over the past three and five years respectively.
Additionally, NEU recently announced a quarterly dividend of $2.25 per share of common stock. This is an increase of $0.15 from the previous quarter’s dividend of $2.10 per share. Dividends will be paid on July 3, 2023.
power rating
NEU’s overall rating is a B, which corresponds to our own rating of ‘Buy’. power rating system. On the other hand, SGML has an overall grade of F, which means a strong sell. The POWR rating is calculated taking into account 118 different factors, each weighted optimally.
Our proprietary rating system also evaluates each stock based on eight different categories. NEU has a B growth grade, in line with its strong performance in the previous quarter. However, SGML’s growth rate is D, which is consistent with its poor financial performance in its last reported quarter.
Additionally, the NEU’s 24-month beta value of 0.48 justifies a B grade for stability. On the other hand, SGML’s 24-month beta of 1.47 complements its D grade for stability.
Out of 84 B rated stocks chemicals In the industry, NEU ranks 4th and SGML ranks 80th.
In addition to the above, we also evaluated both stocks on value, momentum, sentiment and quality. click here To view NEU ratings, visit all SGML ratings here.
The chemical industry is expected to expand significantly and thrive due to the increasing demand for chemical products. Both companies operating in this sector are well positioned to take advantage of the growing market opportunities.
However, as mentioned earlier, NEU has a higher potential for revenue growth. In addition, it ranks higher than SGML due to its consistent dividend performance and high profitability. Therefore, NEU may be a better investment than SGML.
Our research shows that investing in stocks with an overall rating of ‘strong buy’ or ‘buy’ increases your odds of success.View All Top Chemical Stocks here.
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NEU shares were trading at $398.36 a share Friday morning, up $1.72 (+0.43%). Year-to-date, the NEU is up 28.85%, while the benchmark S&P 500 index is up 9.96% over the same period.
About the author: Kritika Salma
An interest in risky financial products and a passion for writing led Kritika to become an analyst and financial journalist. She has a Bachelor of Commerce degree and currently she is taking the CFA program. With her groundbreaking approach, she aims to help investors identify untapped investment opportunities.
post NewMarket (NEU) or Sigma Lithium (SGML): Which chemical stock is the better investment? first appeared in stocknews.com
