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

Profitability

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

Net Margins Return on Equity Return on Assets
International Paper 3.73% 27.09% 3.61%
Packaging Corporation of America 8.05% 27.78% 8.62%

Dividends

International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 3.4%. Packaging Corporation of America pays an annual dividend of $2.52 per share and has a dividend yield of 2.3%. International Paper pays out 93.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Packaging Corporation of America pays out 48.6% of its earnings in the form of a dividend. International Paper has raised its dividend for 6 consecutive years and Packaging Corporation of America has raised its dividend for 5 consecutive years. International Paper is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

83.7% of International Paper shares are held by institutional investors. Comparatively, 88.9% of Packaging Corporation of America shares are held by institutional investors. 0.6% of International Paper 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 hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

International Paper has a beta of 1.46, meaning that its stock price is 46% more volatile than the S&P 500. Comparatively, Packaging Corporation of America has a beta of 1.86, meaning that its stock price is 86% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for International Paper and Packaging Corporation of America, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
International Paper 2 4 6 0 2.33
Packaging Corporation of America 0 6 4 0 2.40

International Paper presently has a consensus target price of $58.78, indicating a potential upside of 8.97%. Packaging Corporation of America has a consensus target price of $104.33, indicating a potential downside of 5.64%. Given International Paper’s higher probable upside, equities research analysts clearly believe International Paper is more favorable than Packaging Corporation of America.

Valuation & Earnings

This table compares International Paper 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
International Paper $21.93 billion 1.02 $3.22 billion $1.97 27.38
Packaging Corporation of America $6.08 billion 1.70 $1.22 billion $5.19 21.30

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

Summary

Packaging Corporation of America beats International Paper on 11 of the 17 factors compared between the two stocks.

International Paper Company Profile

International Paper Company is a paper and packaging company with primary markets and manufacturing operations in North America, Europe, Latin America, Russia, Asia, Africa and the Middle East. The Company’s segments include Industrial Packaging, Global Cellulose Fibers, Printing Papers and Consumer Packaging. The Company is a manufacturer of containerboard in the United States. Its products include linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft. The Company’s cellulose fibers product portfolio includes fluff, market and specialty pulps. The Company is a producer of printing and writing papers. The products in Printing Papers segment include uncoated papers. The Company is a producer of solid bleached sulfate board. As of December 31, 2016, the Company operated 29 pulp, paper and packaging mills, 170 converting and packaging plants, 16 recycling plants and three bag facilities in the United States.

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.

Receive News & Stock Ratings for International Paper Company Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for International Paper Company and related stocks with our FREE daily email newsletter.