Contrasting Linde (NASDAQ:LIN) & Celanese (NYSE:CE)

Celanese (NYSE:CE) and Linde (NASDAQ:LIN) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Institutional and Insider Ownership

98.9% of Celanese shares are held by institutional investors. Comparatively, 82.8% of Linde shares are held by institutional investors. 0.3% of Celanese shares are held by insiders. Comparatively, 0.7% of Linde shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations for Celanese and Linde, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Celanese	3	11	7	0	2.19
Linde	0	2	8	2	3.00

Celanese currently has a consensus target price of $59.33, suggesting a potential upside of 9.70%. Linde has a consensus target price of $508.20, suggesting a potential upside of 2.35%. Given Celanese’s higher possible upside, research analysts clearly believe Celanese is more favorable than Linde.

Profitability

This table compares Celanese and Linde’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%
Linde	20.30%	19.52%	9.10%

Dividends

Celanese pays an annual dividend of $0.12 per share and has a dividend yield of 0.2%. Linde pays an annual dividend of $6.00 per share and has a dividend yield of 1.2%. Celanese pays out -1.1% of its earnings in the form of a dividend. Linde pays out 41.1% 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. Linde has increased its dividend for 5 consecutive years. Linde is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Celanese has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500. Comparatively, Linde has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Celanese	$9.54 billion	0.62	-$1.52 billion	($10.60)	-5.10
Linde	$33.99 billion	6.82	$6.90 billion	$14.59	34.03

Linde has higher revenue and earnings than Celanese. Celanese 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 Celanese on 14 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 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.