Linde (NASDAQ:LIN) & PPG Industries (NYSE:PPG) Critical Comparison

Linde (NASDAQ:LIN) and PPG Industries (NYSE:PPG) are both large-cap basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Profitability

This table compares Linde and PPG Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Linde	20.44%	19.80%	9.17%
PPG Industries	9.83%	21.68%	7.85%

Insider & Institutional Ownership

82.8% of Linde shares are held by institutional investors. Comparatively, 81.9% of PPG Industries shares are held by institutional investors. 0.3% of Linde shares are held by insiders. Comparatively, 0.3% of PPG Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Linde pays an annual dividend of $6.40 per share and has a dividend yield of 1.2%. PPG Industries pays an annual dividend of $2.84 per share and has a dividend yield of 2.5%. Linde pays out 42.5% of its earnings in the form of a dividend. PPG Industries pays out 40.5% 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. Linde has increased its dividend for 5 consecutive years and PPG Industries has increased its dividend for 54 consecutive years. PPG Industries is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Linde has a beta of 0.72, suggesting that its stock price is 28% less volatile than the S&P 500. Comparatively, PPG Industries has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Linde and PPG Industries, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Linde	0	1	11	1	3.00
PPG Industries	0	10	7	0	2.41

Linde presently has a consensus target price of $548.67, indicating a potential upside of 7.15%. PPG Industries has a consensus target price of $126.13, indicating a potential upside of 9.01%. Given PPG Industries’ higher possible upside, analysts clearly believe PPG Industries is more favorable than Linde.

Earnings & Valuation

This table compares Linde and PPG Industries”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Linde	$33.99 billion	6.97	$6.90 billion	$15.06	34.00
PPG Industries	$15.88 billion	1.62	$1.58 billion	$7.01	16.51

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

Summary

Linde beats PPG Industries on 11 of the 18 factors compared between the two stocks.

About Linde

Linde plc operates as an industrial gas company in the Americas, Europe, the Middle East, Africa, Asia, and South Pacific. It offers atmospheric gases, including oxygen, nitrogen, argon, and rare gases; and process gases, such as carbon dioxide, helium, hydrogen, electronic gases, specialty gases, and acetylene. The company also designs and constructs turnkey process plants for third-party customers, as well as for the gas businesses in various locations, such as air separation, hydrogen, synthesis, olefin, and natural gas plants. It serves a range of industries, including healthcare, chemicals and energy, manufacturing, metals and mining, food and beverage, and electronics. The company was founded in 1879 and is based in Woking, the United Kingdom.

About PPG Industries

PPG Industries, Inc. manufactures and distributes paints, coatings, and specialty materials in the United States, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa. It operates through two segments, Performance Coatings and Industrial Coatings. The Performance Coatings segment offers coatings, solvents, adhesives, sealants, sundries, and software for automotive and commercial transport/fleet repair and refurbishing, light industrial coatings, and specialty coatings for signs; wood stains; paints, thermoplastics, pavement marking products, and other advanced technologies for pavement marking for government, commercial infrastructure, painting, and maintenance contractors; and coatings, sealants, transparencies, transparent armor, adhesives, engineered materials, and packaging and chemical management services for commercial, military, regional jet, and general aviation aircraft. The Industrial Coatings segment offers coatings, adhesives and sealants, and metal pretreatments, as well as services and coatings applications for appliances, agricultural and construction equipment, consumer electronics, automotive parts and accessories, building products, kitchenware, and transportation vehicles and other finished products; and on-site coatings services. It also provides coatings for metal cans, closures, plastic and aluminum tubes for food, beverage and personal care, promotional, and specialty packaging; amorphous precipitated silica for tire, battery separator, and other end-uses; TESLIN substrates for labels, e-passports, drivers' licenses, breathable membranes, and loyalty and identification cards; and organic light emitting diode materials, displays and lighting lens materials, optical lenses, color-change products, and photochromic dyes. PPG Industries, Inc. was incorporated in 1883 and is headquartered in Pittsburgh, Pennsylvania.