Critical Contrast: Nalco (NLC) and Clean Harbors (CLH)

Nalco (NYSE: NLC) and Clean Harbors (NYSE:CLH) are both mid-cap industrials companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.

Volatility and Risk

Nalco has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Clean Harbors has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Insider and Institutional Ownership

92.7% of Clean Harbors shares are held by institutional investors. 8.9% of Clean Harbors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Nalco and Clean Harbors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nalco 0 1 0 0 2.00
Clean Harbors 0 5 6 0 2.55

Nalco presently has a consensus target price of $2.50, suggesting a potential upside of Infinity. Clean Harbors has a consensus target price of $61.00, suggesting a potential upside of 13.26%. Given Nalco’s higher possible upside, analysts plainly believe Nalco is more favorable than Clean Harbors.

Valuation and Earnings

This table compares Nalco and Clean Harbors’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nalco N/A N/A N/A $2.20 N/A
Clean Harbors $2.76 billion 1.11 -$39.87 million $0.07 769.54

Nalco has higher earnings, but lower revenue than Clean Harbors. Nalco is trading at a lower price-to-earnings ratio than Clean Harbors, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Nalco and Clean Harbors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nalco 6.29% 33.10% 5.83%
Clean Harbors 0.13% 1.05% 0.31%

Summary

Nalco beats Clean Harbors on 6 of the 11 factors compared between the two stocks.

Nalco Company Profile

Nalco Holding Company provides water, energy, air and process technologies and services. It provides service for water, energy and air through the worldwide manufacture and sale of specialized service chemical programs. This includes production and service related to the sale and application of chemicals and technology used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining, and other industrial processes. It has three segments: Water Services, Paper Services and Energy Services. In July 2010, it acquired all of the business assets of Fabrication Technologies, Inc. (FabTech), which is a North American supplier of enhanced oil recovery (EOR) mixing and injection equipment. In April 2010, it purchased the assets of Res-Kem Corp. and General Water Services Corp. In January 2010, Nalco acquired a 50.1% controlling financial interest in Nalco Africa. In December 2011, it merged with Ecolab, Inc.

Clean Harbors Company Profile

Clean Harbors, Inc. is a provider of environmental, energy and industrial services throughout North America. The Company is also a re-refiner and recycler of used oil in the world and a provider of parts cleaning and related environmental services to commercial, industrial and automotive customers in North America. The Company operates in six segments: Technical Services, Industrial Services, Field Services, Safety-Kleen, Oil and Gas Field Services, and Lodging Services. The Company is also a service provider in the recovery and decontamination of pollutants. The Company provides services to protect the ozone layer from the effects of chlorofluorocarbons (CFCs). It offers brands, such as Performance Plus brand and green brand EcoPower. The Company also offers CleanPack services, which include the collection, identification and categorization, packaging, transportation and disposal of laboratory chemicals and household hazardous waste. It also provides hydro excavation services.

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