Head to Head: Johnson Matthey vs. Croda

In this series, some of your favorite FTSE 100 (UKX) shares go head to head in a three-round contest for superiority.

In Round 1, the firms fight on earnings; in Round 2, on dividends; and Round 3 is a battle of the balance sheets. The winner will be the company that has racked up most points at the end of the contest.

Stepping into the ring today are blue-chip chemicals companies Johnson Matthey  (LSE: JMAT  ) and Croda International  (LSE: CRDA  ) .

The shares of both companies have outperformed the FTSE 100 over the past year. The Footsie is up 9%, but Johnson Matthey is up 27% and Croda 34%. However, over the last six months and three months the two companies have moderately underperformed the index.

Let's take our seats at ringside.

Round 1: earnings


Johnson Matthey


Recent share price



Last year price-to-earnings (P/E)



Current year forecast P/E



Four-year earnings per share (eps) compound annual growth rate (CAGR) (%)



Current year forecast eps growth (%)



Forecast operating margin (%)



Source: Digital Look. Winners in bold.

Johnson Matthey takes the first two points, but Croda edges the round by taking the remaining three, scoring particularly well on historic earnings growth and operating margin.

Round 2: dividends


Johnson Matthey


Last year dividend yield (%)



Current year forecast dividend yield (%)



Four-year dividend CAGR (%)



Current year forecast dividend growth (%)



Forecast dividend cover



Source: Digital Look. Winners in bold.

Johnson Matthey takes four of the five points in round two, although the scoring on the yield figures was very close. As with historic earnings growth in round one, Croda scores strongly on historic dividend growth in this round.

Round 3: balance sheet


Johnson Matthey


Price-to-book (P/B) ratio



Net gearing (%)



Source: Digital Look. Winners in bold.

Johnson Matthey finishes with a flourish, taking both points in round three and the overall contest by two rounds to one. The total points tally is Johnson Matthey eight and Croda four.

Post-match assessment
This contest was a little closer than the eight-to-four win for Johnson Matthey suggests, as the dividend yield points were very tight. Nevertheless, this was still a reasonably comfortable victory for Johnson Matthey. In addition to the two yield points, Johnson Matthey took the other three valuation-ratio points: historic and forecast P/E, and P/B.

Both companies have spoken recently of depressed market conditions, and analysts are forecasting current-year EPS growth well below the firms' historic rates -- indeed, negative growth in Johnson Matthey's case. Dividend growth is likewise expected to fall well short of past levels.

With P/Es significantly above the market average and dividend yields significantly below, neither company looks a particularly attractive investment proposition to me at the present time.

If you're more interested in "value" companies, on lower P/Es and higher yields, help yourself to the free and exclusive Motley Fool report, "8 Shares Held By Britain's Super Investor."

Top fund manager Neil Woodford has outperformed the market by more than 300% over the past 15 years by investing in dividend-paying blue chips when other investors are shunning them.

In "8 Shares Held By Britain's Super Investor," you can learn about Woodford's enormously successful strategy and some of the blue-chip companies he currently favors. As I say, the report is free and you can download it right now: simply click here.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2133384, ~/Articles/ArticleHandler.aspx, 10/21/2016 8:28:33 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 12:01 PM
CRDA $3606.31 Down -16.69 -0.46%
Croda Internationa… CAPS Rating: No stars
JMAT $3499.90 Down -7.10 -0.20%
Johnson Matthey CAPS Rating: No stars