Enzymotec (NASDAQ:ENZY) vs. Quaker Chemical Corporation (KWR) Critical Review

Quaker Chemical Corporation (NYSE: KWR) and Enzymotec (NASDAQ:ENZY) are both small-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.

Profitability

This table compares Quaker Chemical Corporation and Enzymotec’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Quaker Chemical Corporation 6.73% 15.52% 9.26%
Enzymotec -14.52% -3.86% -3.57%

Dividends

Quaker Chemical Corporation pays an annual dividend of $1.42 per share and has a dividend yield of 1.1%. Enzymotec does not pay a dividend. Quaker Chemical Corporation pays out 36.1% of its earnings in the form of a dividend. Enzymotec has raised its dividend for 7 consecutive years.

Earnings and Valuation

This table compares Quaker Chemical Corporation and Enzymotec’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Quaker Chemical Corporation $777.77 million 2.28 $106.55 million $3.93 33.87
Enzymotec $47.01 million 5.14 -$4.56 million ($0.29) -36.38

Quaker Chemical Corporation has higher revenue and earnings than Enzymotec. Enzymotec is trading at a lower price-to-earnings ratio than Quaker Chemical Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Quaker Chemical Corporation has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500. Comparatively, Enzymotec has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Insider and Institutional Ownership

82.6% of Quaker Chemical Corporation shares are held by institutional investors. Comparatively, 27.9% of Enzymotec shares are held by institutional investors. 3.6% of Quaker Chemical Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations for Quaker Chemical Corporation and Enzymotec, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Quaker Chemical Corporation 0 1 0 0 2.00
Enzymotec 0 2 0 0 2.00

Quaker Chemical Corporation presently has a consensus price target of $153.00, indicating a potential upside of 14.96%. Enzymotec has a consensus price target of $8.00, indicating a potential downside of 24.17%. Given Quaker Chemical Corporation’s higher probable upside, analysts clearly believe Quaker Chemical Corporation is more favorable than Enzymotec.

Summary

Quaker Chemical Corporation beats Enzymotec on 10 of the 14 factors compared between the two stocks.

About Quaker Chemical Corporation

Quaker Chemical Corporation is a provider of process fluids, chemical specialties, and technical expertise to a range of industries, including steel, aluminum, mining, aerospace, tube and pipe, cans and others. The Company’s segments include North America, Europe, Middle East and Africa (EMEA), Asia/Pacific and South America. It develops, produces, and markets a range of formulated chemical specialty products and offers chemical management services. Its products and services include rolling lubricants (used by manufacturers of steel in the hot and cold rolling of steel and by manufacturers of aluminum in the hot rolling of aluminum); machining and grinding compounds (used by metalworking customers in cutting, shaping, and grinding metal parts, which require special treatment to enable them to tolerate the manufacturing process, achieve closer tolerance, and improve tool life), and hydraulic fluids (used by steel, metalworking, and other customers to operate hydraulic equipment).

About Enzymotec

Enzymotec Ltd. is a nutritional ingredients and medical foods company. The Company’s technologies, research expertise and clinical validation process enables it to develop solutions across a range of products. The Company operates in two segments: Nutrition segment and VAYA Pharma segment. Both of the Company’s segments offer a range of products that leverage its lipid-related offerings. Its product suite addresses the entire human life-cycle, from infancy to old age, and comprises ingredients in products ranging from infant formula to nutritional supplements, as well as branded medical foods, sold only under a doctor’s supervision. It markets its product portfolio to established global consumer companies and physicians and target large and growing consumer health and wellness markets. The Company’s clinically-validated products include bio-functional lipid-based compounds designed to address dietary needs, medical disorders and common diseases.

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