Critical Survey: Sociedad Quimica y Minera (NYSE:SQM) versus Element Solutions (NYSE:ESI)

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Sociedad Quimica y Minera and Element Solutions, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sociedad Quimica y Minera	1	7	4	0	2.25
Element Solutions	0	3	6	2	2.91

Sociedad Quimica y Minera presently has a consensus price target of $59.75, indicating a potential downside of 14.27%. Element Solutions has a consensus price target of $30.75, indicating a potential upside of 18.60%. Given Element Solutions’ stronger consensus rating and higher probable upside, analysts clearly believe Element Solutions is more favorable than Sociedad Quimica y Minera.

Institutional and Insider Ownership

12.4% of Sociedad Quimica y Minera shares are held by institutional investors. Comparatively, 92.3% of Element Solutions shares are held by institutional investors. 6.9% of Element Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Sociedad Quimica y Minera and Element Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sociedad Quimica y Minera	12.12%	9.79%	4.54%
Element Solutions	9.58%	14.01%	7.28%

Volatility & Risk

Sociedad Quimica y Minera has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, Element Solutions has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Dividends

Sociedad Quimica y Minera pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Element Solutions pays an annual dividend of $0.32 per share and has a dividend yield of 1.2%. Sociedad Quimica y Minera pays out 6.6% of its earnings in the form of a dividend. Element Solutions pays out 32.3% 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.

Valuation and Earnings

This table compares Sociedad Quimica y Minera and Element Solutions”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sociedad Quimica y Minera	$4.53 billion	4.40	$685.12 million	$1.83	38.08
Element Solutions	$2.46 billion	2.55	$244.20 million	$0.99	26.19

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

Summary

Element Solutions beats Sociedad Quimica y Minera on 10 of the 17 factors compared between the two stocks.

About Sociedad Quimica y Minera

Sociedad Química y Minera de Chile S.A. operates as a mining company worldwide. The company offers specialty plant nutrients, including sodium potassium nitrate, specialty blends, and other specialty fertilizers under Ultrasol, Qrop, Speedfol, Allganic, Ultrasoline, ProP, and Prohydric brands. It also provides iodine and its derivatives for use in medical, agricultural, industrial, and human and animal nutrition products comprising x-ray contrast media, biocides, antiseptics and disinfectants, pharmaceutical intermediates, polarizing films for LCD and LED screens, chemicals, organic compounds, and pigments, as well as added to edible salt to prevent iodine deficiency disorders. In addition, the company produces lithium carbonate and lithium hydroxide which are used in the production of cathode material for secondary batteries; lithium chloride; and basic lithium chemicals and lithium derivatives used in lubricating greases for heat-resistant glass, chips for the ceramic and glazing industry, and air conditioning chemicals, as well as other pharmaceutical syntheses and metal alloys. Further, it produces potassium sulfate; and potassium chloride which is used as a fertilizer for the application of potassium to different crops. Additionally, the company produces and markets industrial chemicals, such as sodium nitrate mainly used in the production of glass and explosives, metal processing and recycling, and production of insulating materials and adhesives; potassium nitrate used as a raw material to produce frits and special glass, as well as in the enamel, metal treatment, and pyrotechnic sectors; solar salts used as a thermal storage medium in solar power generation plants; and potassium chloride as an additive in oil drilling and food processing sectors. Furthermore, it is involved in the commercialization of third-party fertilizers; and exploration of copper, gold, and silver deposits. The company was founded in 1926 and is headquartered in Santiago, Chile.

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.