Critical Contrast: Element Solutions (NYSE:ESI) & Air Products and Chemicals (NYSE:APD)

Air Products and Chemicals (NYSE:APD) and Element Solutions (NYSE:ESI) are both materials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, profitability, institutional ownership, earnings, analyst recommendations and valuation.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Air Products and Chemicals and Element Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Air Products and Chemicals	0	7	10	1	2.67
Element Solutions	0	2	6	3	3.09

Air Products and Chemicals presently has a consensus price target of $336.53, suggesting a potential upside of 18.42%. Element Solutions has a consensus price target of $45.70, suggesting a potential upside of 32.18%. Given Element Solutions’ stronger consensus rating and higher possible upside, analysts clearly believe Element Solutions is more favorable than Air Products and Chemicals.

Valuation and Earnings

This table compares Air Products and Chemicals and Element Solutions”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Air Products and Chemicals	$12.04 billion	5.26	-$394.50 million	($0.22)	-1,291.77
Element Solutions	$2.55 billion	3.30	$190.80 million	$0.74	46.72

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

Dividends

Air Products and Chemicals pays an annual dividend of $7.24 per share and has a dividend yield of 2.5%. Element Solutions pays an annual dividend of $0.32 per share and has a dividend yield of 0.9%. Air Products and Chemicals pays out -3,290.9% of its earnings in the form of a dividend. Element Solutions pays out 43.2% 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. Air Products and Chemicals has increased its dividend for 43 consecutive years. Air Products and Chemicals is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Air Products and Chemicals and Element Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Air Products and Chemicals	-0.38%	16.87%	7.18%
Element Solutions	5.67%	14.88%	7.51%

Risk and Volatility

Air Products and Chemicals has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Element Solutions has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500.

Institutional & Insider Ownership

81.7% of Air Products and Chemicals shares are owned by institutional investors. Comparatively, 92.3% of Element Solutions shares are owned by institutional investors. 1.9% of Air Products and Chemicals shares are owned by insiders. Comparatively, 6.2% of Element Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Element Solutions beats Air Products and Chemicals on 11 of the 18 factors compared between the two stocks.

About Air Products and Chemicals

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, and syngas; and specialty gases for customers in various industries, including refining, chemical, manufacturing, electronics, energy production, medical, food, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage. The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.

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.