Israel Chemicals Shs (NYSE: ICL) and Agrium (NYSE:AGU) are both large-cap basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Dividends

Israel Chemicals Shs pays an annual dividend of $0.12 per share and has a dividend yield of 2.9%. Agrium pays an annual dividend of $3.50 per share and has a dividend yield of 3.2%. Israel Chemicals Shs pays out -80.0% of its earnings in the form of a dividend. Agrium pays out 84.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Israel Chemicals Shs has increased its dividend for 5 consecutive years.

Insider and Institutional Ownership

6.1% of Israel Chemicals Shs shares are owned by institutional investors. Comparatively, 65.9% of Agrium shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Israel Chemicals Shs and Agrium’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Israel Chemicals Shs $5.36 billion 1.00 -$122.00 million ($0.15) -28.06
Agrium $13.67 billion 1.09 $592.00 million $4.15 26.06

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

Volatility and Risk

Israel Chemicals Shs has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Agrium has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Profitability

This table compares Israel Chemicals Shs and Agrium’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Israel Chemicals Shs -3.43% 13.55% 4.20%
Agrium 4.22% 9.69% 3.54%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Israel Chemicals Shs and Agrium, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Israel Chemicals Shs 0 2 0 0 2.00
Agrium 0 6 9 0 2.60

Israel Chemicals Shs presently has a consensus target price of $4.88, suggesting a potential upside of 15.80%. Agrium has a consensus target price of $112.50, suggesting a potential upside of 4.04%. Given Israel Chemicals Shs’ higher possible upside, research analysts plainly believe Israel Chemicals Shs is more favorable than Agrium.

Summary

Agrium beats Israel Chemicals Shs on 10 of the 16 factors compared between the two stocks.

Israel Chemicals Shs Company Profile

Israel Chemicals Ltd. operates as a specialty minerals company worldwide. The company operates through two segments, Essential Minerals and Specialty Solutions. The company extracts potash from the Dead Sea; mines and produces potash and salt from subterranean mines in Spain and the United Kingdom, as well as uses part of the potash to produce compound fertilizers; mines and processes phosphate rock in open mines; and produces sulfuric acid, agricultural phosphoric acid, phosphate fertilizers, compound fertilizers, liquid fertilizers, and soluble fertilizers. It also manufactures compound fertilizers in the Netherlands, Germany, and Belgium; liquid fertilizers and soluble fertilizers in Spain; slow release and controlled release fertilizers in the Netherlands and the United States; and phosphate-based food additives for livestock in Turkey and Israel. In addition, the company produces bromine out of a solution that is created as a by-product of the potash production process in Sodom, as well as bromine-based products; chlorine-based products in Israel and the United States; and flame retardants and phosphorus based products, as well as extracts salt, magnesia, and chlorine from Dead Sea brine. Further, it purchases clean phosphoric acid and manufactures thermal phosphoric acids, which are used to manufacture downstream products and phosphate salts that are used as a raw material for manufacturing, food additives, hygiene products and flame retardants, and fire extinguishment products. It also manufactures phosphorous derivatives based on phosphorous; specialty products based on aluminum acids; and other raw materials. The company sells its products through marketing companies, agents, and distributors. Israel Chemicals Ltd. was founded in 1968 and is headquartered in Tel Aviv, Israel.

Agrium Company Profile

Agrium Inc. is a retailer of agricultural products and services in the United States, Canada, Australia, Argentina, Brazil, Chile and Uruguay and a multi-national producer and wholesale marketer of nutrients for agricultural and industrial markets. The Company’s segments include Retail and Wholesale. As of December 31, 2016, its Retail business unit marketed crop nutrients, crop protection products, seed, merchandise, application and other agronomic services through 1,500 retail locations in the United States, Canada, Australia, Argentina, Brazil, Chile and Uruguay. Its Wholesale business unit manufactures, mines and markets a range of nutrients, including nitrogen-based, potash and phosphate-based crop nutrient products. As of December 31, 2016, its Wholesale business unit owned and operated five North American nitrogen facilities, four located in Alberta, Canada and one in Borger, Texas, United States.

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