Analyzing Eastman Chemical (NYSE:EMN) and Element Solutions (NYSE:ESI)

Element Solutions (NYSE:ESI) and Eastman Chemical (NYSE:EMN) are both mid-cap materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, risk and institutional ownership.

Insider and Institutional Ownership

92.3% of Element Solutions shares are held by institutional investors. Comparatively, 83.7% of Eastman Chemical shares are held by institutional investors. 6.2% of Element Solutions shares are held by insiders. Comparatively, 2.6% of Eastman Chemical shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Element Solutions has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500. Comparatively, Eastman Chemical has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.

Dividends

Element Solutions pays an annual dividend of $0.32 per share and has a dividend yield of 0.9%. Eastman Chemical pays an annual dividend of $3.36 per share and has a dividend yield of 5.1%. Element Solutions pays out 37.6% of its earnings in the form of a dividend. Eastman Chemical pays out 87.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eastman Chemical has raised its dividend for 15 consecutive years. Eastman Chemical is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Element Solutions and Eastman Chemical, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Element Solutions	0	2	7	3	3.08
Eastman Chemical	1	9	6	0	2.31

Element Solutions currently has a consensus target price of $46.36, indicating a potential upside of 35.53%. Eastman Chemical has a consensus target price of $74.64, indicating a potential upside of 12.35%. Given Element Solutions’ stronger consensus rating and higher possible upside, research analysts clearly believe Element Solutions is more favorable than Eastman Chemical.

Earnings & Valuation

This table compares Element Solutions and Eastman Chemical”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Element Solutions	$2.55 billion	3.25	$190.80 million	$0.85	40.25
Eastman Chemical	$8.75 billion	0.87	$474.00 million	$3.84	17.30

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

Profitability

This table compares Element Solutions and Eastman Chemical’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Element Solutions	5.87%	15.45%	7.67%
Eastman Chemical	7.15%	10.69%	4.30%

Summary

Element Solutions beats Eastman Chemical on 12 of the 18 factors compared between the two stocks.

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.

About Eastman Chemical

Eastman Chemical Company operates as a specialty materials company in the United States, China, and internationally. The company's Additives & Functional Products segment offers amine derivative-based building blocks, intermediates for surfactants, metam-based soil fumigants, and organic acid-based solutions; specialty coalescent and solvents, paint additives, and specialty polymers; and heat transfer and aviation fluids. It serves transportation, personal care, wellness, food, feed, agriculture, building and construction, water treatment, energy, consumables, durables, and electronics markets. Its Advanced Materials segment provides copolyesters, cellulosic biopolymers, cellulose esters, polyvinyl butyral sheets, and window and protective films for value-added end uses in the transportation, durables, electronics, building and construction, medical and pharma, and consumables markets. The company's Chemical Intermediates segment offers olefin and acetyl derivatives, ethylene, and commodity solvents; and primary non-phthalate and phthalate plasticizers, and niche non-phthalate plasticizers for industrial chemicals and processing, building and construction, health and wellness, and food and feed. Its Fibers segment provides cellulose acetate tow, triacetin, cellulose acetate flake, acetic acid, and acetic anhydride for use in filtration media primarily cigarette filters; natural and solution dyed acetate yarns, and staple fiber for use in consumables, and health and wellness markets; and wet-laid nonwoven media, specialty and engineered papers, and cellulose acetate fibers for transportation, industrial, agriculture and mining, and aerospace markets. The company was founded in 1920 and is headquartered in Kingsport, Tennessee.