Element Solutions Inc (ESI) stock analysis

P/E above its 5-year median

Element Solutions's P/E of 40.1 is above its own 5-year median of 27.5.

P/E above the industry

Element Solutions's P/E of 40.1 is above the Chemicals and Allied Products median of 25.2.

EV/EBITDA above its 5-year median

Element Solutions's EV/EBITDA of 17.5 is above its 5-year median of 15.5.

P/B above the industry

Element Solutions's price-to-book of 2.88 is above the Chemicals and Allied Products median of 2.24.

Trading above fair value

The share price of $34.05 is above our fair value estimate of $24.84.

Margin of safety under 20%

The price is 37.1% above fair value, so there is no margin of safety.

Revenue growing under 10% a year

Revenue grew 0.0% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 1.3% a year over the last three fiscal years.

Earnings acceleration

Needs positive net income now, a year ago and five years ago.

Growing faster than the industry

Revenue grew 39.6% over the last twelve months; the Chemicals and Allied Products median is 11.0%.

Guidance raised

Element Solutions raised its full year 2026 adjusted EBITDA outlook on Jul 27, 2026.

Gross margin slipping

Gross margin was 36.6% over the last twelve months, against 42.0% a year earlier.

Return on equity under 15%

Return on equity was 7.4% over the last twelve months and averaged 7.7% over five years; we look for 15% on both.

Return on capital under 10%

Return on invested capital was 6.3%, below the 10% that usually covers the cost of capital.

Return on equity below the industry

Element Solutions's return on equity of 7.4% is below the Chemicals and Allied Products median of 7.4%.

Earnings over 5 years

Needs positive net income five years ago and in the latest year.

Net margin below its 5-year average

Net margin was 5.9% over the last twelve months, against a 5-year average of 7.5%.

Net margin above the industry

Element Solutions's net margin of 5.9% is above the Chemicals and Allied Products median of 5.6%.

High debt

Debt is 72.5% of shareholders' equity, above the 40% we consider low.

Debt rising against equity

Debt to equity rose from 65.3% five years ago to 72.5%.

Debt not well covered by cash flow

Operating cash flow over the last twelve months equals 13.6% of total debt; we look for at least 20%.

Interest coverage

Interest expense is not reported separately.

Short-term assets cover short-term debts

Current assets are 2.78 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.52; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Element Solutions paid dividends worth 0.9% of the share price over the last twelve months.

Yield below Treasuries

The 0.9% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Element Solutions yields 0.9%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 9 fiscal years.

Covered by earnings

Dividends take 38.4% of net income.

Covered by free cash flow

Dividends take 43.0% of free cash flow.