KapStone Paper and Packaging Corporation (NYSE: KS) and Packaging Corporation of America (NYSE:PKG) are both mid-cap basic materials companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, institutional ownership, risk, valuation, earnings and dividends.

Analyst Recommendations

This is a summary of current ratings for KapStone Paper and Packaging Corporation and Packaging Corporation of America, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KapStone Paper and Packaging Corporation 0 6 5 0 2.45
Packaging Corporation of America 0 7 4 0 2.36

KapStone Paper and Packaging Corporation currently has a consensus target price of $26.60, suggesting a potential upside of 18.96%. Packaging Corporation of America has a consensus target price of $101.30, suggesting a potential downside of 10.44%. Given KapStone Paper and Packaging Corporation’s stronger consensus rating and higher probable upside, equities analysts plainly believe KapStone Paper and Packaging Corporation is more favorable than Packaging Corporation of America.

Volatility & Risk

KapStone Paper and Packaging Corporation has a beta of 2.83, indicating that its stock price is 183% more volatile than the S&P 500. Comparatively, Packaging Corporation of America has a beta of 1.88, indicating that its stock price is 88% more volatile than the S&P 500.

Institutional & Insider Ownership

83.3% of KapStone Paper and Packaging Corporation shares are held by institutional investors. Comparatively, 88.3% of Packaging Corporation of America shares are held by institutional investors. 13.3% of KapStone Paper and Packaging Corporation shares are held by company insiders. Comparatively, 1.2% of Packaging Corporation of America shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares KapStone Paper and Packaging Corporation and Packaging Corporation of America’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
KapStone Paper and Packaging Corporation $3.10 billion 0.70 $349.68 million $0.78 28.67
Packaging Corporation of America $5.91 billion 1.79 $1.18 billion $4.90 23.08

Packaging Corporation of America has higher revenue and earnings than KapStone Paper and Packaging Corporation. Packaging Corporation of America is trading at a lower price-to-earnings ratio than KapStone Paper and Packaging Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares KapStone Paper and Packaging Corporation and Packaging Corporation of America’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KapStone Paper and Packaging Corporation 2.45% 11.18% 3.06%
Packaging Corporation of America 7.81% 27.29% 8.40%

Dividends

KapStone Paper and Packaging Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Packaging Corporation of America pays an annual dividend of $2.52 per share and has a dividend yield of 2.2%. KapStone Paper and Packaging Corporation pays out 51.3% of its earnings in the form of a dividend. Packaging Corporation of America pays out 51.4% 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. KapStone Paper and Packaging Corporation has increased its dividend for 6 consecutive years.

Summary

Packaging Corporation of America beats KapStone Paper and Packaging Corporation on 10 of the 17 factors compared between the two stocks.

KapStone Paper and Packaging Corporation Company Profile

KapStone Paper and Packaging Corporation is a producer of containerboard and the kraft paper in North America. The Company operates through two segments: Paper and Packaging, and Distribution. The Paper and Packaging segment manufactures and sells a range of containerboard, corrugated products and specialty paper for industrial and consumer markets. The Distribution segment, which operates under the Victory and Golden State Container trade names, provides its customers packaging solutions and services and distributes corrugated packaging materials and other specialty packaging products, which include stretch film, void fill, carton sealing tape and other specialty tapes. The Company produces a range of products ranging from basic corrugated shipping containers to specialized packaging. The Company also produces packaging for fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

Packaging Corporation of America Company Profile

Packaging Corporation of America (PCA) is a producer of containerboard products and uncoated freesheet. The Company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment produces a range of corrugated packaging products. The Paper segment manufactures and sells a range of papers, including communication-based papers and pressure sensitive papers. The Company’s containerboard mills produces linerboard and semi-chemical corrugating medium, which are papers primarily used in the production of corrugated products. The Company’s corrugated products manufacturing plants produce a range of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays. The Company also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

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