Financial Analysis: OMNOVA Solutions (OMN) and Ecolab (ECL)

OMNOVA Solutions (NYSE: OMN) and Ecolab (NYSE:ECL) are both specialty chemicals – nec companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
OMNOVA Solutions -0.78% 22.71% 3.84%
Ecolab 9.67% 19.05% 6.97%

Volatility & Risk

OMNOVA Solutions has a beta of 2.22, meaning that its stock price is 122% more volatile than the S&P 500. Comparatively, Ecolab has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

Dividends

Ecolab pays an annual dividend of $1.48 per share and has a dividend yield of 1.1%. OMNOVA Solutions does not pay a dividend. Ecolab pays out 33.3% of its earnings in the form of a dividend. OMNOVA Solutions has increased its dividend for 31 consecutive years.

Analyst Ratings

This is a summary of current ratings and target prices for OMNOVA Solutions and Ecolab, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OMNOVA Solutions 0 1 2 0 2.67
Ecolab 0 9 6 0 2.40

OMNOVA Solutions currently has a consensus price target of $12.00, indicating a potential upside of 13.21%. Ecolab has a consensus price target of $136.00, indicating a potential upside of 3.46%. Given OMNOVA Solutions’ stronger consensus rating and higher probable upside, equities analysts clearly believe OMNOVA Solutions is more favorable than Ecolab.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
OMNOVA Solutions $759.90 million 0.63 -$400,000.00 ($0.14) -75.71
Ecolab $13.15 billion 2.89 $1.23 billion $4.44 29.61

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

Institutional and Insider Ownership

87.4% of OMNOVA Solutions shares are owned by institutional investors. Comparatively, 75.7% of Ecolab shares are owned by institutional investors. 4.8% of OMNOVA Solutions shares are owned by insiders. Comparatively, 1.5% of Ecolab shares are owned by 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 OMNOVA Solutions on 9 of the 17 factors compared between the two stocks.

About OMNOVA Solutions

OMNOVA Solutions Inc. is a provider of emulsion polymers, specialty chemicals and engineered surfaces for commercial, industrial and residential end uses. The Company’s segments include Performance Chemicals and Engineered Surfaces. The Performance Chemicals segment produces a range of emulsion polymers and specialty chemicals based on styrene butadiene, styrene butadiene acrylonitrile, styrene butadiene vinyl pyridine, nitrile butadiene, polyvinyl acetate, acrylic, styrene acrylic, vinyl acrylic, glyoxal, fluorochemical and bio-based chemistries. The Engineered Surfaces segment develops, designs, produces and markets a line of functional and decorative surfacing products, including coated fabrics, vinyl, paper, and specialty laminates and industrial films. The Performance Chemicals segment includes two product lines: Performance Materials and Specialty Chemicals, and the Engineered Surfaces segment includes two product lines: Coated Fabrics, and Laminates and Performance Films.

About Ecolab

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 and Equipment Care operating units.

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