American Vanguard (NYSE:AVD – Get Free Report) and Ecolab (NYSE:ECL – Get Free Report) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, earnings, profitability, dividends, analyst recommendations and institutional ownership.
Profitability
This table compares American Vanguard and Ecolab’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Vanguard | -8.71% | -4.13% | -1.34% |
| Ecolab | 12.80% | 22.64% | 9.05% |
Analyst Recommendations
This is a summary of current recommendations and price targets for American Vanguard and Ecolab, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Vanguard | 1 | 0 | 1 | 0 | 2.00 |
| Ecolab | 0 | 4 | 16 | 1 | 2.86 |
Insider and Institutional Ownership
79.0% of American Vanguard shares are held by institutional investors. Comparatively, 74.9% of Ecolab shares are held by institutional investors. 7.6% of American Vanguard shares are held by company insiders. Comparatively, 0.5% of Ecolab shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Risk and Volatility
American Vanguard has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, Ecolab has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.
Dividends
American Vanguard pays an annual dividend of $0.03 per share and has a dividend yield of 1.0%. Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.2%. American Vanguard pays out -1.9% of its earnings in the form of a dividend. Ecolab pays out 39.5% 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. Ecolab has raised its dividend for 33 consecutive years. Ecolab is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares American Vanguard and Ecolab”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Vanguard | $522.88 million | 0.16 | -$49.88 million | ($1.59) | -1.85 |
| Ecolab | $16.08 billion | 4.40 | $2.08 billion | $7.39 | 34.05 |
Ecolab has higher revenue and earnings than American Vanguard. American Vanguard is trading at a lower price-to-earnings ratio than Ecolab, indicating that it is currently the more affordable of the two stocks.
Summary
Ecolab beats American Vanguard on 13 of the 18 factors compared between the two stocks.
About American Vanguard
American Vanguard Corporation, through its subsidiaries, develops, manufactures, and markets specialty chemicals for agricultural, commercial, and consumer uses in the United States and internationally. It manufactures and formulates chemicals, including insecticides, fungicides, herbicides, soil health, plant nutrition, molluscicides, growth regulators, soil fumigants, and biorationals in liquid, powder, and granular forms for crops, turf and ornamental plants, and human and animal health protection. The company also markets, sells, and distributes end-use chemical and biological products for crop applications; and distributes chemicals for turf and ornamental markets. It distributes its products through national distribution companies, and buying groups or co-operatives; and through sales offices, sales force executives, sales agents, and wholly owned distributors. American Vanguard Corporation was incorporated in 1969 and is headquartered in Newport Beach, California.
About Ecolab
Ecolab Inc. provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through three segments: Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences. The Global Industrial segment offers water treatment and process applications, and cleaning and sanitizing solutions to manufacturing, food and beverage processing, transportation, chemical, metals and mining, power generation, pulp and paper, commercial laundry, petroleum, refining, and petrochemical industries. Its Global Institutional & Specialty segment provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government and education, and retail industries. The Global Healthcare & Life Sciences segment offers specialized cleaning and sanitizing products to the healthcare, personal care, and pharmaceutical industries, such as infection prevention and surgical solutions, and end-to-end cleaning and contamination control solutions under the Ecolab, Microtek, and Anios brand names. In addition, the company provides pest elimination services to detect, eliminate, and prevent pests, such as rodents and insects in restaurants, food and beverage processors, hotels, grocery operations, and other commercial segments including education, life sciences, and healthcare customers. Further, it offers colloidal silica for binding and polishing applications in semiconductor, catalyst, and aerospace component manufacturing, as well as chemical industries; and products and services that manage wash process through custom designed programs, premium products, dispensing equipment, water and energy management, and reduction, as well as real time data management. It sells its products through field sales and corporate account personnel, distributors, and dealers. Ecolab Inc. was founded in 1923 and is headquartered in Saint Paul, Minnesota.
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