Ecolab (NYSE: ECL) and KMG Chemicals (NYSE:KMG) are both basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, valuation, institutional ownership, risk, earnings, dividends and profitability.
This table compares Ecolab and KMG Chemicals’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Ecolab has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, KMG Chemicals has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.
This is a summary of current ratings and recommmendations for Ecolab and KMG Chemicals, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ecolab presently has a consensus price target of $136.38, indicating a potential downside of 2.82%. KMG Chemicals has a consensus price target of $71.50, indicating a potential upside of 15.90%. Given KMG Chemicals’ stronger consensus rating and higher possible upside, analysts plainly believe KMG Chemicals is more favorable than Ecolab.
Earnings and Valuation
This table compares Ecolab and KMG Chemicals’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ecolab||$13.15 billion||3.07||$1.23 billion||$4.44||31.48|
|KMG Chemicals||$333.44 million||2.84||$23.63 million||$1.91||32.30|
Ecolab has higher revenue and earnings than KMG Chemicals. Ecolab is trading at a lower price-to-earnings ratio than KMG Chemicals, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
76.6% of Ecolab shares are owned by institutional investors. Comparatively, 56.3% of KMG Chemicals shares are owned by institutional investors. 1.5% of Ecolab shares are owned by company insiders. Comparatively, 6.1% of KMG Chemicals shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Ecolab pays an annual dividend of $1.48 per share and has a dividend yield of 1.1%. KMG Chemicals pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Ecolab pays out 33.3% of its earnings in the form of a dividend. KMG Chemicals pays out 6.3% 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 32 consecutive years. Ecolab is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Ecolab beats KMG Chemicals on 12 of the 17 factors compared between the two stocks.
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.
About KMG Chemicals
KMG Chemicals, Inc. manufactures, formulates and globally distributes specialty chemicals. The Company operates businesses selling electronic chemicals, industrial wood treating chemicals, and industrial valve lubricants and sealants. The Company operates through two segments: Electronic chemicals and Other chemicals. The Company operates through its subsidiaries, KMG Electronic Chemicals, Inc. (KMG EC), KMG-Bernuth, Inc. (KMG Bernuth) and KMG Val-Tex, LLC (Val-Tex). The Company’s Electronic chemicals business sells high purity and ultra-purity wet process chemicals primarily to the semiconductor industry. The Company’s Other chemicals segment includes its industrial lubricants business and wood treating chemicals business. The Company’s products sulfuric, phosphoric, nitric and hydrofluoric acids, ammonium hydroxide, hydrogen peroxide, isopropyl alcohol, other specialty organic solvents and various blends of chemicals.
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