Reviewing NewMarket (NYSE:NEU) & Ecolab (NYSE:ECL)

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ecolab	$16.08 billion	4.95	$2.08 billion	$7.28	38.81
NewMarket	$2.73 billion	2.20	$418.75 million	$44.42	14.33

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

Analyst Ratings

This is a summary of recent ratings and target prices for Ecolab and NewMarket, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ecolab	0	7	12	1	2.70
NewMarket	0	0	1	0	3.00

Ecolab currently has a consensus price target of $323.56, suggesting a potential upside of 14.52%. Given Ecolab’s higher possible upside, equities research analysts clearly believe Ecolab is more favorable than NewMarket.

Risk & Volatility

Ecolab has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, NewMarket has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.

Dividends

Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.0%. NewMarket pays an annual dividend of $12.00 per share and has a dividend yield of 1.9%. Ecolab pays out 40.1% of its earnings in the form of a dividend. NewMarket pays out 27.0% 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 33 consecutive years and NewMarket has increased its dividend for 7 consecutive years. NewMarket is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ecolab	12.91%	22.73%	9.08%
NewMarket	15.37%	25.38%	12.73%

Insider and Institutional Ownership

74.9% of Ecolab shares are held by institutional investors. Comparatively, 61.1% of NewMarket shares are held by institutional investors. 0.0% of Ecolab shares are held by company insiders. Comparatively, 19.1% of NewMarket shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Ecolab beats NewMarket on 10 of the 18 factors compared between the two stocks.

About Ecolab

Ecolab Inc. provides water, hygiene, and infection prevention solutions and services in the United States and internationally. The company operates through three segments: Global Industrial; Global Institutional & Specialty; and Global Healthcare & Life Sciences. The Global Industrial segment offers water treatment and process applications, and cleaning and sanitizing solutions to manufacturing, food and beverage processing, transportation, chemical, metals and mining, power generation, pulp and paper, commercial laundry, petroleum, refining, and petrochemical industries. Its Global Institutional & Specialty segment provides specialized cleaning and sanitizing products to the foodservice, hospitality, lodging, government and education, and retail industries. The Global Healthcare & Life Sciences segment offers specialized cleaning and sanitizing products to the healthcare, personal care, and pharmaceutical industries, such as infection prevention and surgical solutions, and end-to-end cleaning and contamination control solutions under the Ecolab, Microtek, and Anios brand names. In addition, the company provides pest elimination services to detect, eliminate, and prevent pests, such as rodents and insects in restaurants, food and beverage processors, hotels, grocery operations, and other commercial segments including education, life sciences, and healthcare customers. Further, it offers colloidal silica for binding and polishing applications in semiconductor, catalyst, and aerospace component manufacturing, as well as chemical industries; and products and services that manage wash process through custom designed programs, premium products, dispensing equipment, water and energy management, and reduction, as well as real time data management. It sells its products through field sales and corporate account personnel, distributors, and dealers. Ecolab Inc. was founded in 1923 and is headquartered in Saint Paul, Minnesota.

About NewMarket

NewMarket Corporation, through its subsidiaries, primarily engages in the manufacture and sale of petroleum additives. The company offers lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized; engine oil additives designed for passenger cars, motorcycles, on and off-road heavy duty commercial equipment, locomotives, and engines in ocean-going vessels; driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids; and industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils. It also provides fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers. In addition, the company engages in the marketing of antiknock compounds, as well as contracted manufacturing and services activities; and owns and manages a real property in Virginia. It operates in North America, Latin America, Asia Pacific, Europe, the Middle East, Africa, and India. NewMarket Corporation was founded in 1887 and is headquartered in Richmond, Virginia.