Element Solutions

ESI

Chemicals - Specialty · Basic Materials

Price

$37.40

-0.23 (-0.61%)

Market Cap

$9.11B

Winston Score

Winston is serious

Mixed quality — meaningful strengths and weaknesses.

Share count falling — buybacks

−2.2% over 4y

The company has reduced its share count over this period, returning value to shareholders through buybacks.

Diluted shares outstanding: 247.9M (2021) → 242.4M (2025)

Element Solutions makes specialty chemicals used in manufacturing electronics and industrial products. Its main customers are factories that produce circuit boards, semiconductors, microchips, and car parts. The company sells chemical formulas that help manufacturers plate, coat, and finish metal surfaces so that electronic devices work reliably.

Element Solutions earns money by selling its chemical products directly to manufacturers, often under long-term supply relationships. It operates globally, with significant business in Asia, Europe, and North America, and generates roughly $2.4 billion in annual revenue. Its competitive edge comes from deep technical expertise and the fact that its chemicals are a small but critical part of a customer's production process, making switching suppliers risky and costly. The key growth driver is rising demand for advanced electronics, including electric vehicles and AI-related hardware, which require more sophisticated chemical processes — though a slowdown in global electronics manufacturing would be the main risk to watch.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+41.5% YoY

YoY Growth Rate

Revenue accelerating

EPS Growth

-42.5% YoY

YoY Growth Rate

Earnings declining

R&D Spend

$68M/ year

↑ Rising (+7% vs prior year)

2.6% of revenue

In line with sector average (3%)

R&D investment increasing — building for the future

Insider Activity

6.4%ownership

Insiders own a meaningful stake in the company

Cash Runway

~6 months

$177M cash & investments

Quarterly Free Cash Flow

↓ Burn rate worsening

Short runway — potential dilution ahead through share issuance

Revenue accelerating

Element Solutions grew revenue 41% year-over-year and the growth rate is speeding up. That's the kind of momentum growth investors look for — the question is whether margins can follow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

Every number that matters to educated investors.

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Quality

Gross Margin

38.4%

Modest — 38.4% gross margin

Operating Margin

13.3%

Healthy — 13.3% operating margin

ROCE

2.3%

Weak — 2.3% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

+13.0%

Fast-growing sales (13.0% YoY)

EPS YoY

-48.3%

Earnings shrinking (-48.3% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

0/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

133%

Turns 133% of profit into real cash

FCF Margin

4.3%

Thin free cash flow (4.3%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

0.79

Moderate — manageable debt (0.79)

Interest Cover

6.21x

Adequate interest coverage (6.2x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

P/E Ratio (TTM)

60.8x

Expensive — P/E 60.8

P/E over 35. The market is pricing in heavy, sustained growth.

P/E vs Forward

+34.8

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (60.8 → 26.0)

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Dividends

Dividend Yield

0.70%

Small dividend — 0.70% yield

Modest yield. The bulk of any return needs to come from price appreciation.

Dividend Growth

+0.0%

Dividend flat

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