Element Solutions (NYSE:ESI) & Ecolab (NYSE:ECL) Financial Analysis

Element Solutions (NYSE:ESI) and Ecolab (NYSE:ECL) are both large-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their risk, dividends, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Earnings & Valuation

This table compares Element Solutions and Ecolab”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Element Solutions	$2.55 billion	4.04	$190.80 million	$0.62	68.30
Ecolab	$16.08 billion	4.33	$2.08 billion	$7.39	33.49

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

Profitability

This table compares Element Solutions and Ecolab’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Element Solutions	5.32%	14.19%	7.30%
Ecolab	12.80%	22.64%	9.05%

Dividends

Element Solutions pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.2%. Element Solutions pays out 51.6% 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 increased its dividend for 33 consecutive years. Ecolab is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Element Solutions has a beta of 1.27, suggesting that its share price is 27% more volatile than the S&P 500. Comparatively, Ecolab has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500.

Institutional and Insider Ownership

92.3% of Element Solutions shares are owned by institutional investors. Comparatively, 74.9% of Ecolab shares are owned by institutional investors. 6.2% of Element Solutions shares are owned by insiders. Comparatively, 0.5% of Ecolab shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Element Solutions and Ecolab, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Element Solutions	0	2	6	3	3.09
Ecolab	0	4	16	1	2.86

Element Solutions currently has a consensus price target of $39.57, indicating a potential downside of 6.55%. Ecolab has a consensus price target of $322.53, indicating a potential upside of 30.31%. Given Ecolab’s higher probable upside, analysts plainly believe Ecolab is more favorable than Element Solutions.

Summary

Ecolab beats Element Solutions on 12 of the 18 factors compared between the two stocks.

About Element Solutions

Element Solutions Inc operates as a specialty chemicals company in the United States, China, and internationally. The company operates in two segments, Electronics, and Industrial & Specialty. The Electronics segment researches, formulates, and sells specialty chemicals and materials for various types of electronics hardware products. This segment also supplies surface mount technologies, fluxes, thermal management material, coatings, and other attachment materials; chemical formulations to the electronics industry; and advanced copper interconnects, die attachment, sintered silver material, adhesives, wafer bump processes, and photomask technologies for semiconductor industry. It primarily serves mobile communications, computers, automobiles, and aerospace equipment industries. The Industrial & Specialty segment provides industrial solutions, which include chemical systems that protect and decorate metal and plastic surfaces; consumable chemicals that enable printing image transfer on flexible packaging materials; and chemistries used in water-based hydraulic control fluids for offshore energy production applications. It serves aerospace, automotive, construction, consumer electronics, consumer packaged goods, and oil and gas production end markets. The company was formerly known as Platform Specialty Products Corporation and changed its name to Element Solutions Inc in January 2019. Element Solutions Inc was founded in 1785 and is headquartered in Fort Lauderdale, Florida.

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.