Critical Survey: Luxfer (LXFR) and Tronox (TROX)

Luxfer (NYSE: LXFR) and Tronox (NYSE:TROX) are both industrial products companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Insider and Institutional Ownership

82.3% of Luxfer shares are held by institutional investors. Comparatively, 68.5% of Tronox shares are held by institutional investors. 1.2% of Tronox shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Luxfer pays an annual dividend of $0.50 per share and has a dividend yield of 3.0%. Tronox pays an annual dividend of $0.18 per share and has a dividend yield of 1.0%. Luxfer pays out 52.6% of its earnings in the form of a dividend. Tronox pays out -66.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Analyst Recommendations

This is a summary of recent ratings and target prices for Luxfer and Tronox, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luxfer 0 0 0 0 N/A
Tronox 0 0 3 0 3.00

Tronox has a consensus target price of $27.00, suggesting a potential upside of 45.24%. Given Tronox’s higher probable upside, analysts clearly believe Tronox is more favorable than Luxfer.

Risk & Volatility

Luxfer has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Tronox has a beta of 3.21, meaning that its share price is 221% more volatile than the S&P 500.

Earnings & Valuation

This table compares Luxfer and Tronox’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Luxfer $441.30 million 1.00 $11.50 million $0.95 17.57
Tronox $1.70 million 1,327.44 -$285.00 million ($0.27) -68.85

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

Profitability

This table compares Luxfer and Tronox’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luxfer 3.04% 17.34% 6.88%
Tronox -14.67% 3.68% 0.78%

Summary

Luxfer beats Tronox on 8 of the 15 factors compared between the two stocks.

About Luxfer

Luxfer Holdings PLC, a materials technology company, designs, manufactures, and supplies high-performance materials, components, and high-pressure gas-containment devices for healthcare, environmental, protection, and specialty end-markets in Europe, North America, and internationally. It operates in two segments, Gas Cylinders and Elektron. The Gas Cylinders segment manufactures and markets aluminum and composite cylinders and systems, which are used in self-contained breathing apparatus, fire extinguishers, alternative fuels, bulk gas transportation, specialty gases, medical, beverages, scuba, and aerospace applications under the Luxfer Gas Cylinders brand. This segment also designs and manufactures aluminum, titanium, and magnesium plates for use in aerospace, automotive, rail, and medical components and products under the Superform brand. The Elektron segment focuses on specialty materials based on magnesium, zirconium, and rare earths. It develops and manufactures magnesium alloys; magnesium powders; and magnesium, copper, and zinc photoengraving plates. This segment also develops and manufactures specialty zirconium products, including zirconium-based materials, zirconium oxides, fiber-optic fuel cells, and other products under the MEL Chemicals brand. The company was founded in 1898 and is based in Manchester, the United Kingdom.

About Tronox

Tronox Limited produces and markets titanium bearing mineral sands and titanium dioxide (TiO2) pigment in North America, Europe, South Africa, and the Asia-Pacific region. The company engages in the exploration, mining, and beneficiation of mineral sands deposits. It also produces titanium feedstock, including chloride slag, slag fines, rutile, synthetic rutile, leucoxene, titanium slag, and ilmenite, as well as pig iron and zircon; and suplies and markets TiO2 under the TRONOX brand name, which is used in the manufacture of paint and other coatings, and plastics and paper, as well as in various other applications comprising inks, fibers, rubber, food, cosmetics, and pharmaceuticals. In addition, the company manufactures and markets electrolytic manganese dioxide primarily for battery materials; and specialty boron products for semiconductors, pharmaceuticals, high-performance fibers, specialty ceramics, and epoxies, as well as igniter formulations. Tronox Limited was founded in 2005 and is based in Stamford, Connecticut.

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