Linde (NASDAQ:LIN) versus Novozymes A/S (OTCMKTS:NVZMY) Critical Contrast

Linde (NASDAQ:LIN) and Novozymes A/S (OTCMKTS:NVZMY) are both large-cap basic materials companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Linde and Novozymes A/S, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Linde	0	1	9	1	3.00
Novozymes A/S	0	1	0	1	3.00

Linde presently has a consensus price target of $521.60, suggesting a potential upside of 2.67%. Given Linde’s higher possible upside, research analysts clearly believe Linde is more favorable than Novozymes A/S.

Dividends

Linde pays an annual dividend of $6.40 per share and has a dividend yield of 1.3%. Novozymes A/S pays an annual dividend of $0.81 per share and has a dividend yield of 1.3%. Linde pays out 43.9% of its earnings in the form of a dividend. Novozymes A/S pays out 57.9% 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.

Valuation and Earnings

This table compares Linde and Novozymes A/S”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Linde	$33.99 billion	6.93	$6.90 billion	$14.59	34.82
Novozymes A/S	$4.70 billion	5.30	$660.28 million	$1.40	42.96

Linde has higher revenue and earnings than Novozymes A/S. Linde is trading at a lower price-to-earnings ratio than Novozymes A/S, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Linde and Novozymes A/S’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Linde	20.30%	19.52%	9.10%
Novozymes A/S	13.96%	6.37%	4.32%

Volatility & Risk

Linde has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, Novozymes A/S has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500.

Institutional & Insider Ownership

82.8% of Linde shares are owned by institutional investors. Comparatively, 0.0% of Novozymes A/S shares are owned by institutional investors. 0.7% of Linde shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Linde beats Novozymes A/S on 13 of the 16 factors compared between the two stocks.

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.

About Novozymes A/S

Novozymes A/S produces and sells industrial enzymes, microorganisms, and probiotics in Denmark, rest of Europe, North America, Asia Pacific, the Middle East, Africa, Latin America, and internationally. The company offers protein solutions for the food and beverage industry. It also offers industrial hygiene, drain openers, hard surface, medical cleaning, septic tanks, ware washing, and professional laundry services. In addition, the company provides dishwashing, softener, microbial and medical cleaning services. Further, it provides corn, cotton, forages, peanuts, pulses, soybeans, wheat, small grains, bioyield, and biocontrol solutions; warm water species, recirculating aquaculture system; animal health and nutrition solutions; fiber modification, bleach boosting, deposit control, and starch modification solutions. Additionally, the company provides carbon capture, leather and textiles solutions; enzyme solutions, including corn and wheat separation, liquefaction, saccharification, filtration, isomerization, maltose, and specialties solutions; warm water species and recirculating aquaculture system solutions; human health solutions, comprising brain, oral, protective and immune, and gastrointestinal health solutions; ethanol, biodiesel, renewable diesel, education, wastewater, and sewage sludge, and renewable diesel solutions; agriculture and industry, biogas food waste, food waste, biocatalysis, cell culture, diagnostics, enzyme, and biogas solutions. Furthermore, it provides lipases, proteases, oxidoreductases, and carbohydrases. Novozymes A/S was founded in 1925 and is based in Bagsvaerd, Denmark.