Head to Head Review: International Flavors & Fragrances (NYSE:IFF) vs. Element Solutions (NYSE:ESI)

Element Solutions (NYSE:ESI) and International Flavors & Fragrances (NYSE:IFF) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Institutional and Insider Ownership

92.3% of Element Solutions shares are held by institutional investors. Comparatively, 96.0% of International Flavors & Fragrances shares are held by institutional investors. 6.2% of Element Solutions shares are held by company insiders. Comparatively, 1.1% of International Flavors & Fragrances shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Element Solutions and International Flavors & Fragrances”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Element Solutions	$2.55 billion	3.63	$190.80 million	$0.79	48.09
International Flavors & Fragrances	$10.89 billion	1.66	-$361.00 million	($1.37)	-51.79

Element Solutions has higher earnings, but lower revenue than International Flavors & Fragrances. International Flavors & Fragrances is trading at a lower price-to-earnings ratio than Element Solutions, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Element Solutions and International Flavors & Fragrances’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Element Solutions	7.48%	13.79%	7.28%
International Flavors & Fragrances	-3.20%	7.67%	4.07%

Analyst Recommendations

This is a summary of current ratings for Element Solutions and International Flavors & Fragrances, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Element Solutions	0	2	7	3	3.08
International Flavors & Fragrances	1	4	12	0	2.65

Element Solutions currently has a consensus target price of $35.75, indicating a potential downside of 5.90%. International Flavors & Fragrances has a consensus target price of $87.50, indicating a potential upside of 23.32%. Given International Flavors & Fragrances’ higher possible upside, analysts clearly believe International Flavors & Fragrances is more favorable than Element Solutions.

Volatility and Risk

Element Solutions has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, International Flavors & Fragrances has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Dividends

Element Solutions pays an annual dividend of $0.32 per share and has a dividend yield of 0.8%. International Flavors & Fragrances pays an annual dividend of $1.60 per share and has a dividend yield of 2.3%. Element Solutions pays out 40.5% of its earnings in the form of a dividend. International Flavors & Fragrances pays out -116.8% 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. International Flavors & Fragrances is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Element Solutions beats International Flavors & Fragrances on 11 of the 17 factors compared between the two stocks.

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.

About International Flavors & Fragrances

International Flavors & Fragrances, Inc. engages in the manufacture and supply of flavors and fragrances used in the food, beverage, personal care, and household products industries. It operates through the following segments: Nourish, Health & Biosciences, Scent and Pharma Solutions. The Nourish segment consists of legacy Taste segment combined with N&B’s Food & Beverage division and the food protection business of N&B’s Health & Biosciences division. The Health & Biosciences business consists of a biotechnology-driven portfolio of enzymes, food cultures, probiotics and specialty ingredients for food, home and personal care, and health and wellness applications. The Scent business creates fragrance compounds, fragrance ingredients and cosmetic ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products. The Pharma Solutions business produces a vast portfolio including cellulosics and seaweed-based pharma excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling. The company was founded in 1833 and is headquartered in New York, NY.