Reviewing Ecolab (ECL) & Kraton (KRA)

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

Earnings & Valuation

This table compares Ecolab and Kraton’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ecolab $13.15 billion 3.02 $1.23 billion $4.45 30.94
Kraton $1.74 billion 0.93 $107.30 million $0.76 67.88

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

Volatility and Risk

Ecolab has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500. Comparatively, Kraton has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500.

Institutional and Insider Ownership

76.6% of Ecolab shares are held by institutional investors. Comparatively, 97.5% of Kraton shares are held by institutional investors. 1.5% of Ecolab shares are held by insiders. Comparatively, 4.7% of Kraton shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Ecolab 9.67% 19.05% 6.97%
Kraton 1.27% 14.19% 2.56%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ecolab and Kraton, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ecolab 0 10 6 0 2.38
Kraton 0 1 2 0 2.67

Ecolab currently has a consensus price target of $136.38, indicating a potential downside of 0.94%. Kraton has a consensus price target of $60.00, indicating a potential upside of 16.30%. Given Kraton’s stronger consensus rating and higher probable upside, analysts clearly believe Kraton is more favorable than Ecolab.

Dividends

Ecolab pays an annual dividend of $1.48 per share and has a dividend yield of 1.1%. Kraton does not pay a dividend. Ecolab pays out 33.3% of its earnings in the form of a dividend. Ecolab has raised its dividend for 32 consecutive years.

Summary

Ecolab beats Kraton on 10 of the 17 factors compared between the two stocks.

Ecolab Company Profile

Ecolab Inc. provides water, hygiene and energy technologies and services. The Company’s cleaning and sanitizing programs and products, pest elimination services and equipment maintenance and repair services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors in over 170 countries. Its segments include Global Industrial, Global Institutional, Global Energy, Other and Corporate. Its Global Industrial segment consists of the Water, Food and Beverage, Paper and Textile Care operating units. Its Global Institutional segment consists of the Institutional, Specialty and Healthcare operating units. The Global Energy segment provides on-site and technology-driven solutions to the global drilling, oil and gas production, refining, and petrochemical industries. The Company’s Other segment consists of the Pest Elimination operating units.

Kraton Company Profile

Kraton Corporation, formerly Kraton Performance Polymers, Inc., is a specialty chemicals company. The Company manufactures styrenic block copolymers (SBCs) and other engineered polymers. The Company also produces specialty products primarily derived from pine wood pulping co-products. The Company operates through two segments: Polymer Segment, which comprises SBCs and other engineered polymers business, and Chemical Segment, which comprises pine-based specialty products business. Its SBCs are used in a range of applications, including adhesives, coatings, consumer and personal care products, sealants, lubricants, medical, packaging, automotive, paving, roofing and footwear products. The Company also sells isoprene rubber (IR) and isoprene rubber latex (IRL), which are non-SBC products primarily used in applications, such as medical products, personal care, adhesives, tackifiers, paints and coatings. It offers crude tall oil (CTO) and crude sulfate turpentine (CST).

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