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

Profitability

This table compares International Paper and Westrock’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%
Westrock 2.92% 6.38% 2.68%

Risk & Volatility

International Paper has a beta of 1.46, indicating that its stock price is 46% more volatile than the S&P 500. Comparatively, Westrock has a beta of 1.37, indicating that its stock price is 37% more volatile than the S&P 500.

Dividends

International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 3.4%. Westrock pays an annual dividend of $1.60 per share and has a dividend yield of 2.9%. 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. Westrock pays out 97.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westrock has raised its dividend for 5 consecutive years. International Paper is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

83.7% of International Paper shares are owned by institutional investors. Comparatively, 89.9% of Westrock shares are owned by institutional investors. 0.6% of International Paper shares are owned by company insiders. Comparatively, 2.7% of Westrock shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares International Paper and Westrock’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 1.01 $3.22 billion $1.97 27.36
Westrock $14.41 billion 0.95 $2.12 billion $1.64 33.34

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

Analyst Recommendations

This is a breakdown of current recommendations and price targets for International Paper and Westrock, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
International Paper 2 4 6 0 2.33
Westrock 0 2 8 1 2.91

International Paper presently has a consensus target price of $59.78, suggesting a potential upside of 10.93%. Westrock has a consensus target price of $62.22, suggesting a potential upside of 13.79%. Given Westrock’s stronger consensus rating and higher possible upside, analysts plainly believe Westrock is more favorable than International Paper.

Summary

International Paper beats Westrock on 10 of the 18 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.

Westrock Company Profile

WestRock Company, incorporated on March 6, 2015, is a multinational provider of paper and packaging solutions for consumer and corrugated packaging markets. The Company also develops real estate in the Charleston, South Carolina region. The Company’s segments include Corrugated Packaging, Consumer Packaging, and Land and Development. The Corrugated Packaging segment consists of its containerboard mill and corrugated packaging operations, as well as its recycling operations. The Consumer Packaging segment consists of consumer mills, folding carton, beverage, merchandising displays, and partition operations. The Land and Development segment is engaged in the development and sale of real estate primarily in Charleston, South Carolina.

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