Financial Review: NL Industries (NYSE:NL) vs. Ecolab (NYSE:ECL)

Ecolab (NYSE:ECLGet Free Report) and NL Industries (NYSE:NLGet Free Report) are both basic materials companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, profitability, earnings, analyst recommendations and risk.

Profitability

This table compares Ecolab and NL Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ecolab 13.41% 22.53% 8.82%
NL Industries 41.23% 14.97% 10.80%

Dividends

Ecolab pays an annual dividend of $2.60 per share and has a dividend yield of 1.0%. NL Industries pays an annual dividend of $0.36 per share and has a dividend yield of 5.4%. Ecolab pays out 35.3% of its earnings in the form of a dividend. NL Industries pays out 28.8% 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 raised its dividend for 33 consecutive years and NL Industries has raised its dividend for 2 consecutive years. NL Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

74.9% of Ecolab shares are held by institutional investors. Comparatively, 10.7% of NL Industries shares are held by institutional investors. 0.0% of Ecolab shares are held by insiders. Comparatively, 0.3% of NL Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Ecolab has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500. Comparatively, NL Industries has a beta of 0.31, meaning that its share price is 69% less volatile than the S&P 500.

Earnings and Valuation

This table compares Ecolab and NL Industries”s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ecolab $15.74 billion 4.70 $2.11 billion $7.36 35.46
NL Industries $148.24 million 2.19 $67.23 million $1.25 5.30

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

Analyst Recommendations

This is a summary of recent recommendations for Ecolab and NL Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ecolab 0 5 10 2 2.82
NL Industries 1 0 0 0 1.00

Ecolab presently has a consensus price target of $283.13, indicating a potential upside of 8.47%. NL Industries has a consensus price target of $6.00, indicating a potential downside of 9.52%. Given Ecolab’s stronger consensus rating and higher probable upside, equities analysts plainly believe Ecolab is more favorable than NL Industries.

Summary

Ecolab beats NL Industries on 13 of the 18 factors compared between the two stocks.

About Ecolab

(Get Free Report)

Ecolab Inc. provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through three segments: Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences. The Global Industrial segment offers water treatment and process applications, and cleaning and sanitizing solutions to manufacturing, food and beverage processing, transportation, chemical, metals and mining, power generation, pulp and paper, commercial laundry, petroleum, refining, and petrochemical industries. Its Global Institutional & Specialty segment provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government and education, and retail industries. The Global Healthcare & Life Sciences segment offers specialized cleaning and sanitizing products to the healthcare, personal care, and pharmaceutical industries, such as infection prevention and surgical solutions, and end-to-end cleaning and contamination control solutions under the Ecolab, Microtek, and Anios brand names. In addition, the company provides pest elimination services to detect, eliminate, and prevent pests, such as rodents and insects in restaurants, food and beverage processors, hotels, grocery operations, and other commercial segments including education, life sciences, and healthcare customers. Further, it offers colloidal silica for binding and polishing applications in semiconductor, catalyst, and aerospace component manufacturing, as well as chemical industries; and products and services that manage wash process through custom designed programs, premium products, dispensing equipment, water and energy management, and reduction, as well as real time data management. It sells its products through field sales and corporate account personnel, distributors, and dealers. Ecolab Inc. was founded in 1923 and is headquartered in Saint Paul, Minnesota.

About NL Industries

(Get Free Report)

NL Industries, Inc., through its subsidiary, CompX International Inc., operates in the component products industry in Europe, North America, the Asia Pacific, and internationally. The company manufactures and sells mechanical and electronic cabinet locks and other locking mechanisms, including disc tumbler locks; pin tumbler locking mechanisms under KeSet, System 64, TuBar, and Turbine brands; and electronic locks under CompX eLock and StealthLock brands for use in various applications, such as mailboxes, ignition systems, file cabinets, desk drawers, tool storage cabinets, high security medical cabinetry, integrated inventory and access control secured narcotics boxes, electronic circuit panels, storage compartments, gas station security, vending and cash containment machines. It also offers original equipment and aftermarket stainless steel exhaust headers, exhaust pipes, mufflers, and other exhaust components; gauges, such as GPS speedometers and tachometers; mechanical and electronic controls and throttles; wake enhancement devices, trim tabs, steering wheels, and other billet aluminum accessories; dash panels, LED indicators, wire harnesses, and other accessories; and grab handles, pin cleats, and other accessories; primarily for performance and ski/wakeboard and performance boats. In addition, the company produces and markets value-added titanium dioxide pigments, a base industrial product used in imparting whiteness, brightness, opacity, and durability to a diverse range of customer applications and end-use markets, including coatings, plastics, paper, inks, cosmetics, pharmaceuticals, and other industrial and consumer products. The company sells its component products directly to original equipment manufacturers, as well as through distributors. NL Industries, Inc. was founded in 1891 and is based in Dallas, Texas. NL Industries, Inc. operates as a subsidiary of Valhi, Inc.

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