Analyzing Ecolab (ECL) & Unilever (UL)

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

Insider & Institutional Ownership

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78.3% of Ecolab shares are held by institutional investors. Comparatively, 6.7% of Unilever shares are held by institutional investors. 1.5% of Ecolab shares are held by company insiders. Comparatively, 1.0% of Unilever shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Ecolab and Unilever’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ecolab $13.84 billion 3.07 $1.51 billion $4.69 31.33
Unilever $60.68 billion 1.14 $6.84 billion $2.53 22.17

Unilever has higher revenue and earnings than Ecolab. Unilever 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 Ecolab and Unilever’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ecolab 10.90% 19.10% 7.02%
Unilever N/A N/A N/A

Dividends

Ecolab pays an annual dividend of $1.64 per share and has a dividend yield of 1.1%. Unilever pays an annual dividend of $1.76 per share and has a dividend yield of 3.1%. Ecolab pays out 35.0% of its earnings in the form of a dividend. Unilever pays out 69.6% 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 32 consecutive years and Unilever has increased its dividend for 2 consecutive years.

Volatility & Risk

Ecolab has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Unilever has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Ecolab and Unilever, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ecolab 0 9 9 0 2.50
Unilever 1 4 0 0 1.80

Ecolab presently has a consensus target price of $140.65, indicating a potential downside of 4.30%. Given Ecolab’s stronger consensus rating and higher possible upside, research analysts clearly believe Ecolab is more favorable than Unilever.

Summary

Ecolab beats Unilever on 14 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.

Unilever Company Profile

Unilever PLC operates in the fast-moving consumer goods industry worldwide. It operates through Personal Care, Home Care, Foods, and Refreshment segments. The Personal Care segment offers skin care and hair care products, deodorants, and oral care products. The Home Care segment provides home care products, including powders, liquids and capsules, soap bars, and various cleaning products. The Foods segment offers soups, bouillons, sauces, snacks, mayonnaise, salad dressings, and margarines and spreads. The Refreshment segment provides ice creams and tea-based beverages. The company was founded in 1885 and is headquartered in London, the United Kingdom.

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