Innospec (NASDAQ:IOSP) vs. Standard Lithium (NYSE:SLI) Critical Review

Innospec (NASDAQ:IOSP) and Standard Lithium (NYSE:SLI) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Institutional and Insider Ownership

96.6% of Innospec shares are held by institutional investors. Comparatively, 16.8% of Standard Lithium shares are held by institutional investors. 1.4% of Innospec shares are held by company 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.

Profitability

This table compares Innospec and Standard Lithium’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Innospec	7.68%	13.33%	9.18%
Standard Lithium	N/A	-11.52%	-10.25%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Innospec and Standard Lithium, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Innospec	0	0	0	0	0.00
Standard Lithium	0	0	1	0	3.00

Standard Lithium has a consensus target price of $3.50, suggesting a potential upside of 104.68%. Given Standard Lithium’s stronger consensus rating and higher possible upside, analysts plainly believe Standard Lithium is more favorable than Innospec.

Valuation and Earnings

This table compares Innospec and Standard Lithium”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Innospec	$1.95 billion	1.49	$139.10 million	$5.73	20.36
Standard Lithium	N/A	N/A	$108.82 million	$0.59	2.90

Innospec has higher revenue and earnings than Standard Lithium. Standard Lithium is trading at a lower price-to-earnings ratio than Innospec, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Innospec has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500. Comparatively, Standard Lithium has a beta of 1.79, suggesting that its share price is 79% more volatile than the S&P 500.

Summary

Innospec beats Standard Lithium on 9 of the 13 factors compared between the two stocks.

About Innospec

Innospec Inc. develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally. The company's Fuel Specialties segment offers a range of specialty chemical products that are used as additives in additives in diesel, jet, marine, fuel oil and other fuels. This segment's products are used in the operation of commercial trucking, marine and aviation engines, power station generators, heating oil, and other industrial machinery applications. Its Performance Chemicals segment provides technology-based solutions for its customers' processes or products that focuses on the personal care, home care, agrochemical, construction, mining, and other industrial markets. The company's Oilfield Services segment develops and markets chemical solutions for drilling, completion, fracturing, stimulation, and completion operations; and products for oil and gas production. It sells its products primarily to oil and gas exploration and production companies, oil refineries, fuel manufacturers and users, personal care and home care companies, formulators of agrochemical, and other chemical and industrial companies. The company was formerly known as Octel Corp. and changed its name to Innospec Inc. in January 2006. Innospec Inc. was founded in 1938 and is headquartered in Englewood, Colorado.

About Standard Lithium

Standard Lithium Ltd. explores for, develops, and processes lithium brine properties in the United States. Its flagship project is the Lanxess project with area of approximately 150,000 acres located in southern Arkansas. The company was formerly known as Patriot Petroleum Corp. and changed its name to Standard Lithium Ltd. in December 2016. Standard Lithium Ltd. was incorporated in 1998 and is headquartered in Vancouver, Canada.