Critical Comparison: RPM International (NYSE:RPM) and Ecolab (NYSE:ECL)

Ecolab (NYSE:ECL) and RPM International (NYSE:RPM) are both large-cap basic materials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, risk, dividends, valuation, analyst recommendations, earnings and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and price targets for Ecolab and RPM International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ecolab	0	5	13	3	2.90
RPM International	0	6	7	0	2.54

Ecolab currently has a consensus target price of $294.57, indicating a potential upside of 8.59%. RPM International has a consensus target price of $128.64, indicating a potential upside of 20.28%. Given RPM International’s higher probable upside, analysts plainly believe RPM International is more favorable than Ecolab.

Volatility and Risk

Ecolab has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500. Comparatively, RPM International has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.

Dividends

Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.1%. RPM International pays an annual dividend of $2.16 per share and has a dividend yield of 2.0%. Ecolab pays out 42.0% of its earnings in the form of a dividend. RPM International pays out 40.4% 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 RPM International has raised its dividend for 51 consecutive years. RPM International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ecolab	12.49%	22.55%	8.98%
RPM International	9.16%	24.22%	9.46%

Institutional & Insider Ownership

74.9% of Ecolab shares are held by institutional investors. Comparatively, 81.0% of RPM International shares are held by institutional investors. 0.5% of Ecolab shares are held by insiders. Comparatively, 1.6% of RPM International 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.

Valuation and Earnings

This table compares Ecolab and RPM International”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ecolab	$15.74 billion	4.88	$2.11 billion	$6.96	38.97
RPM International	$7.37 billion	1.86	$688.69 million	$5.35	19.99

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

About Ecolab

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 RPM International

RPM International Inc. manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. It offers waterproofing, coating, and traditional roofing systems; sealants, air barriers, tapes, and foams; residential home weatherization systems; roofing and building maintenance services; sealing and bonding, subfloor preparation, flooring, and glazing solutions; resin flooring systems, polyurethane, MMA waterproof, epoxy floor paint and coatings, concrete repair, and protection products; fire stopping and intumescent steel coating, and manufacturing industry solutions; rolled asphalt roofing materials and chemical admixtures; concrete and masonry admixtures, concrete fibers, curing and sealing compounds, structural grouts and mortars, epoxy adhesives, injection resins, polyurethane foams, floor hardeners and toppings, joint fillers, industrial and architectural coatings, decorative color/stains/stamps, and restoration materials; insulated building cladding materials; and concrete form wall systems. It also provides polymer flooring systems; fiberglass reinforced plastic gratings and shapes; corrosion-control coating, containment and railcar lining, fire and sound proofing, and heat and cryogenic insulation products; specialty construction products; amine curing agents, reactive diluents, and epoxy resins; fluorescent colorants and pigments; shellac-based-specialty and marine coatings; fire and water damage restoration, carpet cleaning, and disinfecting products; fuel additives; wood treatments, coatings, and touch-up products; and nail enamels, polishes, and coating components. In addition, it offers solutions for the paint contractors and DIYers, concrete restoration and flooring, metallic and faux finish coatings, cleaners, and hobby paints and cements; and caulks, adhesives, insulating foams, and patches, as well as spackling, glazing, and repair products. The company was incorporated in 1947 and is headquartered in Medina, Ohio.