Investors are weighing the merits of two mid-cap basic materials companies: Avient Corporation and Methanex Corporation. Both firms are prominent players in their respective sectors, but they exhibit distinct characteristics that could influence investment decisions. This article compares their valuations, profitability, risk factors, and dividends to determine which company may provide superior returns.
Volatility and Risk Assessment
The stock volatility of Avient is notably higher than that of Methanex. With a beta of 1.46, Avient’s stock is approximately 46% more volatile than the S&P 500 index. In contrast, Methanex has a beta of 0.77, indicating that its stock is about 23% less volatile. This difference suggests that while Avient may offer the potential for higher returns, it also comes with increased risk.
Profitability Metrics
When evaluating profitability, both companies show differing strengths. Avient has demonstrated higher earnings but lower revenue compared to Methanex. The net margins, return on equity, and return on assets for both firms indicate their operational efficiencies and financial health. Specific figures reveal that Avient’s profitability metrics are competitive, yet Methanex outpaces it in total revenue.
In terms of institutional and insider ownership, both companies have a significant presence in their respective markets, which often reflects investor confidence.
Analyst Recommendations and Price Targets
Recent analyses provide a mixed outlook for both companies. As per data from MarketBeat, Avient has a consensus target price of $42.50, suggesting a potential upside of approximately 34.56%. On the other hand, Methanex’s target price stands at $46.55, with a potential upside of 16.77%. These figures imply that analysts generally view Avient as the more favorable option based on its higher projected growth.
Earnings and Valuation Insights
In terms of earnings, both companies report differing financial metrics. While Avient has a higher earnings per share, Methanex commands a lower price-to-earnings ratio, indicating it may currently be the more affordable investment option. This disparity highlights the complexity of assessing value in stock investments.
Dividend Considerations
Dividends play a crucial role in investment decisions, particularly for income-focused investors. Avient offers an annual dividend of $1.10 per share, resulting in a dividend yield of 3.5%. Conversely, Methanex provides a lower annual dividend of $0.74 per share, translating to a yield of 1.9%. Notably, Avient has a relatively high payout ratio of 89.4%, which raises concerns about the sustainability of its dividend payments. Methanex, with a payout ratio of 25.1%, appears to offer a more stable dividend profile.
Avient has increased its dividend for one consecutive year, while Methanex has consistently raised its dividend over the past four years, reflecting its commitment to returning value to shareholders.
Conclusion
In summary, Avient outperforms Methanex in nine of the seventeen key factors examined. However, each company presents unique advantages and risks, making them suitable for different investment strategies. Investors should carefully consider their risk tolerance, investment goals, and the specific financial metrics of each company before making decisions.
Avient Corporation, founded in 1885 and headquartered in Avon Lake, Ohio, specializes in material solutions across various industries, including healthcare and packaging. Meanwhile, Methanex Corporation, established in 1968 and based in Vancouver, Canada, is a leading supplier of methanol worldwide, serving diverse chemical markets.
As investors navigate these options, understanding the intricacies of each company will be essential in determining the best fit for their portfolio.
