Comparing Ecolab (NYSE:ECL) and Westlake (NYSE:WLK)

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

Dividends

Westlake pays an annual dividend of $2.13 per share and has a dividend yield of 3.0%. Ecolab pays an annual dividend of $2.92 per share and has a dividend yield of 1.1%. Westlake pays out -22.2% of its earnings in the form of a dividend. Ecolab pays out 39.2% 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. Westlake has increased its dividend for 21 consecutive years and Ecolab has increased its dividend for 33 consecutive years. Westlake is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Westlake	$11.17 billion	0.82	-$1.51 billion	($9.58)	-7.48
Ecolab	$16.08 billion	4.75	$2.08 billion	$7.45	36.60

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

Insider and Institutional Ownership

28.4% of Westlake shares are held by institutional investors. Comparatively, 74.9% of Ecolab shares are held by institutional investors. 1.4% of Westlake shares are held by insiders. Comparatively, 0.5% of Ecolab shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations for Westlake and Ecolab, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Westlake	1	11	3	0	2.13
Ecolab	0	3	17	1	2.90

Westlake presently has a consensus price target of $93.92, indicating a potential upside of 31.03%. Ecolab has a consensus price target of $327.56, indicating a potential upside of 20.12%. Given Westlake’s higher probable upside, research analysts clearly believe Westlake is more favorable than Ecolab.

Risk and Volatility

Westlake has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Ecolab has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Westlake	-10.94%	0.93%	0.44%
Ecolab	12.57%	22.72%	8.71%

Summary

Ecolab beats Westlake on 14 of the 18 factors compared between the two stocks.

About Westlake

Westlake Corporation engages in the manufacture and marketing of performance and essential materials, and housing and infrastructure products in the United States, Canada, Germany, China, Mexico, Brazil, France, Italy, Taiwan, and internationally. The company operates through two segments: Performance and Essential Materials and Housing and Infrastructure Products. The Performance and Essential Materials segment offers ethylene, polyethylene, styrene, chlorinated derivative products, ethylene dichloride, vinyl chloride monomer, polyvinyl chloride (PVC), epoxy specialty resins, and base epoxy resins and intermediaries, as well as chlor-alkali, such as chlorine and caustic soda. The Housing and Infrastructure Products segment provides residential PVC sidings; PVC trim and mouldings; architectural stone veneers; windows; PVC decking; PVC films for various inflatables, wallcovering, and tape and roofing applications; polymer composite and cement roof tiles; PVC pipes and fittings for various water, sewer, electrical, and industrial applications; PVC compounds used in various housing, medical, and automobile products; and consumer and commercial products, such as landscape edging; industrial, home, and office matting; marine dock edging; and masonry joint controls. It offers its products to chemical processors, plastics fabricators, small construction contractors, municipalities, and supply warehouses for use in various consumer and industrial markets, including residential construction, flexible and rigid packaging, automotive products, healthcare products, water treatment, wind turbines, and coatings, as well as other durable and non-durable goods. The company was formerly known as Westlake Chemical Corporation and changed its name to Westlake Corporation in February 2022. Westlake Corporation was founded in 1986 and is headquartered in Houston, Texas. Westlake Corporation operates as a subsidiary of TTWF LP.

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.