Ferro (NYSE: FOE) and Ecolab (NYSE:ECL) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, valuation, earnings and profitability.

Risk & Volatility

Ferro has a beta of 1.9, suggesting that its stock price is 90% more volatile than the S&P 500. Comparatively, Ecolab has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Ferro and Ecolab, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ferro 0 0 4 0 3.00
Ecolab 0 9 6 0 2.40

Ferro presently has a consensus price target of $23.00, suggesting a potential downside of 3.97%. Ecolab has a consensus price target of $136.00, suggesting a potential upside of 0.60%. Given Ecolab’s higher probable upside, analysts plainly believe Ecolab is more favorable than Ferro.

Dividends

Ecolab pays an annual dividend of $1.48 per share and has a dividend yield of 1.1%. Ferro does not pay a dividend. Ecolab pays out 33.3% of its earnings in the form of a dividend. Ferro has raised its dividend for 31 consecutive years.

Insider and Institutional Ownership

97.9% of Ferro shares are owned by institutional investors. Comparatively, 77.0% of Ecolab shares are owned by institutional investors. 2.0% of Ferro shares are owned by company insiders. Comparatively, 1.5% of Ecolab shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Ferro and Ecolab’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ferro $1.15 billion 1.75 -$20.81 million $0.53 45.19
Ecolab $13.15 billion 2.97 $1.23 billion $4.45 30.38

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

Profitability

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

Net Margins Return on Equity Return on Assets
Ferro 3.44% 35.77% 7.57%
Ecolab 9.67% 19.05% 6.97%

Summary

Ecolab beats Ferro on 9 of the 17 factors compared between the two stocks.

Ferro Company Profile

Ferro Corporation (Ferro) produces specialty materials that are sold to a range of manufacturers. The Company’s segments include Performance Coatings (metal and ceramic coatings), Performance Colors and Glass (glass coatings), and Color Solutions. Its Performance Coatings segment includes Tile Coating Systems and Porcelain Enamel. Its manufacturers make products for various end-use markets. The Company’s products fall into two general categories: functional coatings, which perform specific functions in the manufacturing processes and end products of its customers, and color solutions, which provide aesthetic and performance characteristics to its customers’ products. Its products are used in a range of product applications in markets, including appliances, automobiles, building and renovation, electronics, household furnishings, industrial products and packaging.

Ecolab Company Profile

Ecolab Inc. provides water, hygiene and energy technologies and services. The Company’s cleaning and sanitizing programs and products, pest elimination services and equipment maintenance and repair services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors in over 170 countries. Its segments include Global Industrial, Global Institutional, Global Energy, Other and Corporate. Its Global Industrial segment consists of the Water, Food and Beverage, Paper and Textile Care operating units. Its Global Institutional segment consists of the Institutional, Specialty and Healthcare operating units. The Global Energy segment provides on-site and technology-driven solutions to the global drilling, oil and gas production, refining, and petrochemical industries. The Company’s Other segment consists of the Pest Elimination operating units.

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