Critical Review: Arkema (OTCMKTS:ARKAY) vs. Linde (NASDAQ:LIN)

Arkema (OTCMKTS:ARKAY) and Linde (NASDAQ:LIN) are both materials companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, valuation, earnings, institutional ownership, analyst recommendations, risk and dividends.

Insider & Institutional Ownership

82.8% of Linde shares are owned by institutional investors. 0.3% of Linde shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arkema	$10.26 billion	0.48	$71.28 million	$0.29	222.07
Linde	$33.99 billion	6.21	$6.90 billion	$15.48	29.57

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

Risk & Volatility

Arkema has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, Linde has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.

Profitability

This table compares Arkema and Linde’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arkema	0.67%	4.30%	2.15%
Linde	20.43%	20.09%	9.28%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Arkema and Linde, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arkema	1	6	1	0	2.00
Linde	0	1	11	2	3.07

Linde has a consensus target price of $545.07, indicating a potential upside of 19.09%. Given Linde’s stronger consensus rating and higher probable upside, analysts plainly believe Linde is more favorable than Arkema.

Dividends

Arkema pays an annual dividend of $3.11 per share and has a dividend yield of 4.8%. Linde pays an annual dividend of $6.40 per share and has a dividend yield of 1.4%. Arkema pays out 1,072.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Linde pays out 41.3% of its earnings in the form of a dividend. Linde has raised its dividend for 5 consecutive years.

Summary

Linde beats Arkema on 15 of the 18 factors compared between the two stocks.

About Arkema

Arkema S.A. manufactures and sells specialty chemicals and advanced materials worldwide. The company operates in three segments: Adhesive Solutions, Advanced Materials and Coating Solutions, and Intermediates. The Adhesive Solutions segment provides solutions for construction, renovation of buildings, DIY, durable goods, and packaging and non-woven applications; and supplies technologies used in building activities for businesses and individuals, including sealants, tiles, flooring adhesives and waterproofing systems, and technologies used in industry, which include automotive, textiles, glazing, flexible and rigid packaging, and hygiene markets. This segment also offers performance polymers, such as specialty polyamides, PVDF, polyimides, fluorospecialties, and polyetherketoneketone; and performance additives which includes molecular sieves, organic peroxides, thiochemicals, and hydrogen peroxide. The Advance Materials and Coating Solutions segment offers coating solutions, including comprising EU/US acrylics and coating resins; coating additives, such as sartomer photocure resins and coatex rheology additives. This segment also provides decorative paints, industrial coatings, and adhesives; and solutions for applications in the paper, superabsorbent, water treatment and oil and gas extraction, and 3D printing and electronics industries. The Intermediates segment provides fluorogases and acrylics; and industrial intermediate chemicals used in construction, refrigeration and air conditioning, automotive, coatings, and water treatment sectors. Arkema S.A. was incorporated in 2003 and is headquartered in Colombes, France.

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.