Air Products and Chemicals (NYSE:APD) 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 profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.
Insider and Institutional Ownership
82.8% of Air Products and Chemicals shares are held by institutional investors. Comparatively, 73.6% of Ecolab shares are held by institutional investors. 0.4% of Air Products and Chemicals shares are held by insiders. Comparatively, 1.2% of Ecolab shares are held by 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 Air Products and Chemicals and Ecolab's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Air Products and Chemicals | 21.30% | 15.48% | 8.36% |
Ecolab | -8.21% | 18.14% | 6.75% |
Volatility and Risk
Air Products and Chemicals has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Ecolab has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and target prices for Air Products and Chemicals and Ecolab, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Air Products and Chemicals | 0 | 5 | 14 | 0 | 2.74 |
Ecolab | 1 | 10 | 6 | 0 | 2.29 |
Air Products and Chemicals currently has a consensus price target of $295.60, indicating a potential upside of 12.05%. Ecolab has a consensus price target of $205.3846, indicating a potential downside of 1.21%. Given Air Products and Chemicals' stronger consensus rating and higher probable upside, research analysts plainly believe Air Products and Chemicals is more favorable than Ecolab.
Dividends
Air Products and Chemicals pays an annual dividend of $5.36 per share and has a dividend yield of 2.0%. Ecolab pays an annual dividend of $1.92 per share and has a dividend yield of 0.9%. Air Products and Chemicals pays out 64.0% of its earnings in the form of a dividend. Ecolab pays out 33.0% 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. Air Products and Chemicals has increased its dividend for 39 consecutive years and Ecolab has increased its dividend for 36 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Air Products and Chemicals and Ecolab's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Air Products and Chemicals | $8.86 billion | 6.59 | $1.89 billion | $8.38 | 31.48 |
Ecolab | $14.91 billion | 3.99 | $1.56 billion | $5.82 | 35.72 |
Air Products and Chemicals has higher earnings, but lower revenue than Ecolab. Air Products and Chemicals is trading at a lower price-to-earnings ratio than Ecolab, indicating that it is currently the more affordable of the two stocks.
Summary
Air Products and Chemicals beats Ecolab on 12 of the 17 factors compared between the two stocks.