Critical Contrast: Celanese (NYSE:CE) & Ecolab (NYSE:ECL)

Celanese (NYSE:CE) and Ecolab (NYSE:ECL) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, institutional ownership, analyst recommendations, earnings and profitability.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Celanese	$9.54 billion	0.73	-$1.17 billion	($10.60)	-5.96
Ecolab	$16.08 billion	4.80	$2.08 billion	$7.28	37.58

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Celanese	-12.15%	8.75%	1.94%
Ecolab	12.91%	22.73%	9.08%

Risk and Volatility

Celanese has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500. Comparatively, Ecolab has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Celanese and Ecolab, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Celanese	2	8	9	0	2.37
Ecolab	0	5	14	1	2.80

Celanese presently has a consensus target price of $63.47, indicating a potential upside of 0.40%. Ecolab has a consensus target price of $322.38, indicating a potential upside of 17.83%. Given Ecolab’s stronger consensus rating and higher probable upside, analysts clearly believe Ecolab is more favorable than Celanese.

Insider and Institutional Ownership

98.9% of Celanese shares are owned by institutional investors. Comparatively, 74.9% of Ecolab shares are owned by institutional investors. 0.3% of Celanese shares are owned by insiders. Comparatively, 0.5% of Ecolab shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Celanese pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.1%. Celanese pays out -1.1% of its earnings in the form of a dividend. Ecolab pays out 40.1% 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 33 consecutive years. Ecolab is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Ecolab beats Celanese on 16 of the 18 factors compared between the two stocks.

About Celanese

Celanese Corporation, a chemical and specialty materials company, manufactures and sells high performance engineered polymers in the United States and internationally. It operates through Engineered Materials and Acetyl Chain. The Engineered Materials segment develops, produces, and supplies specialty polymers for automotive and medical applications, as well as for use in industrial products and consumer electronics. The Acetyl Chain segment produces and supplies acetyl products, including acetic acid, vinyl acetate monomers, acetic anhydride, and acetate esters that are used as starting materials for colorants, paints, adhesives, coatings, and pharmaceuticals; and organic solvents and intermediates for pharmaceutical, agricultural, and chemical products. It also offers vinyl acetate-based emulsions for use in paints and coatings, adhesives, construction, glass fiber, textiles, and paper applications; and ethylene vinyl acetate resins and compounds, as well as low-density polyethylene for use in flexible packaging films, lamination film products, hot melt adhesives, automotive parts, and carpeting applications. In addition, it provides redispersible powders (RDP) for use in construction applications, including flooring, plasters, insulation, tiling, and waterproofing. Celanese Corporation was founded in 1918 and is headquartered in Irving, Texas.

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.