Neenah Paper (NYSE: NP) and Glatfelter (NYSE:GLT) are both small-cap basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitabiliy.

Risk & Volatility

Neenah Paper has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, Glatfelter has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500.

Earnings and Valuation

This table compares Neenah Paper and Glatfelter’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Neenah Paper $944.20 million 1.37 $142.10 million $4.39 17.57
Glatfelter $1.58 billion 0.48 $82.77 million $0.20 87.60

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

Analyst Ratings

This is a breakdown of recent recommendations for Neenah Paper and Glatfelter, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Neenah Paper 0 1 0 0 2.00
Glatfelter 0 1 1 0 2.50

Neenah Paper currently has a consensus target price of $78.00, indicating a potential upside of 1.10%. Glatfelter has a consensus target price of $24.50, indicating a potential upside of 39.84%. Given Glatfelter’s stronger consensus rating and higher probable upside, analysts clearly believe Glatfelter is more favorable than Neenah Paper.

Dividends

Neenah Paper pays an annual dividend of $1.48 per share and has a dividend yield of 1.9%. Glatfelter pays an annual dividend of $0.52 per share and has a dividend yield of 3.0%. Neenah Paper pays out 33.7% of its earnings in the form of a dividend. Glatfelter pays out 260.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Neenah Paper has raised its dividend for 4 consecutive years and Glatfelter has raised its dividend for 6 consecutive years. Glatfelter is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

92.2% of Neenah Paper shares are owned by institutional investors. Comparatively, 90.8% of Glatfelter shares are owned by institutional investors. 2.0% of Neenah Paper shares are owned by company insiders. Comparatively, 2.3% of Glatfelter shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Neenah Paper and Glatfelter’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Neenah Paper 7.99% 21.03% 9.50%
Glatfelter 0.59% 8.32% 3.57%

Summary

Glatfelter beats Neenah Paper on 9 of the 17 factors compared between the two stocks.

About Neenah Paper

Neenah Paper, Inc. is a producer of technical products and premium fine papers and packaging. The Company has two primary businesses: technical products business, and fine paper and packaging business. Its segments consist of Technical Products, Fine Paper and Packaging, and Other. The technical products business is an international producer of transportation, water and other filter media and durable, saturated and coated substrates. The fine paper and packaging business is a supplier of printing and other specialty papers in North America. Its technical products manufacturing facilities are located near Munich, Germany, in Bolton, England, in Munising, Michigan and in Pittsfield, Massachusetts. In addition, certain technical products are manufactured along with fine paper and packaging products in shared facilities located in upstate New York and Quakertown, Pennsylvania. JET-PRO SofStretch, KIMDURA, GESSNER, PREVAIL, NEENAH and GESSNER are brands of its technical products business.

About Glatfelter

P. H. Glatfelter Company is a manufacturer of specialty papers and fiber-based engineered materials. The Company operates through three business units: Composite Fibers, Advanced Airlaid Materials and Specialty Papers. Its Composite Fibers business unit is engaged in the sale of single-serve tea and coffee filtration papers, non-woven wallcovering materials, metallized papers, composite laminates papers, and various technically special papers, including substrates for electrical applications. Its Advanced Airlaid Materials is engaged in the sale of airlaid non-woven fabric-like materials used in feminine hygiene and adult incontinence products, wipes and other airlaid applications. Its Specialty Papers business unit is engaged in the sale of papers for carbonless and other forms, envelopes, book publishing and engineered products, such as papers for high-speed ink jet printing, office specialty products, greeting cards, postal and other specialty applications.

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