Element Solutions (NYSE:ESI) and ARQ (NASDAQ:ARQ) Critical Review

Element Solutions (NYSE:ESI) and ARQ (NASDAQ:ARQ) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Element Solutions	5.06%	13.51%	6.29%
ARQ	-12.35%	-8.35%	-6.16%

Analyst Recommendations

This is a breakdown of recent ratings for Element Solutions and ARQ, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Element Solutions	0	2	4	0	2.67
ARQ	0	0	0	0	N/A

Element Solutions currently has a consensus target price of $25.60, indicating a potential upside of 7.34%. Given Element Solutions’ higher probable upside, analysts plainly believe Element Solutions is more favorable than ARQ.

Institutional and Insider Ownership

92.3% of Element Solutions shares are owned by institutional investors. Comparatively, 18.5% of ARQ shares are owned by institutional investors. 7.9% of Element Solutions shares are owned by insiders. Comparatively, 22.2% of ARQ shares are owned by 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.

Valuation & Earnings

This table compares Element Solutions and ARQ’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Element Solutions	$2.33 billion	2.47	$118.10 million	$0.49	48.67
ARQ	$99.18 million	2.66	-$12.25 million	($0.50)	-15.74

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

Risk & Volatility

Element Solutions has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500. Comparatively, ARQ has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500.

Summary

Element Solutions beats ARQ on 10 of the 13 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 ARQ

Arq, Inc. produces activated carbon products in North America. The company's products include granular activated carbon, powdered and granular activated carbon, and colloidal carbon products; Arq Powder Wetcake, a fine and low-ash coal waste-derived particle; and additives for air emissions control. Its products are used in various applications, including water treatment, ground water remediation, soil sediments, air emissions, and asphalt additives. The company was formerly known as Advanced Emissions Solutions, Inc. and changed its name to Arq, Inc. in February 2024. Arq, Inc. was founded in 1997 and is headquartered in Greenwood Village, Colorado.