Financial Analysis: International Paper (NYSE:IP) versus Clearwater Paper (NYSE:CLW)

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

Insider & Institutional Ownership

82.0% of International Paper shares are held by institutional investors. Comparatively, 90.0% of Clearwater Paper shares are held by institutional investors. 0.4% of International Paper shares are held by insiders. Comparatively, 3.6% of Clearwater Paper shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares International Paper and Clearwater Paper”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Paper	$18.62 billion	1.32	$557.00 million	($0.10)	-466.40
Clearwater Paper	$1.55 billion	0.21	$196.30 million	$12.05	1.70

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

Analyst Ratings

This is a summary of recent recommendations for International Paper and Clearwater Paper, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Paper	3	1	6	0	2.30
Clearwater Paper	0	0	4	0	3.00

International Paper currently has a consensus price target of $56.02, indicating a potential upside of 20.12%. Clearwater Paper has a consensus price target of $32.00, indicating a potential upside of 56.25%. Given Clearwater Paper’s stronger consensus rating and higher probable upside, analysts clearly believe Clearwater Paper is more favorable than International Paper.

Risk and Volatility

International Paper has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500. Comparatively, Clearwater Paper has a beta of 0.17, indicating that its stock price is 83% less volatile than the S&P 500.

Profitability

This table compares International Paper and Clearwater Paper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Paper	-0.12%	2.63%	1.09%
Clearwater Paper	12.98%	-4.11%	-1.76%

About International Paper

International Paper Company produces and sells renewable fiber-based packaging and pulp products in North America, Latin America, Europe, and North Africa. It operates through two segments, Industrial Packaging and Global Cellulose Fibers. The company offers linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft; and pulp for a range of applications, such as diapers, towel and tissue products, feminine care, incontinence, and other personal care products, as well as specialty pulps for use in textiles, construction materials, paints, coatings, and others. It sells its products directly to end users and converters, as well as through agents, resellers, and distributors. The company was founded in 1898 and is headquartered in Memphis, Tennessee.

About Clearwater Paper

Clearwater Paper Corporation manufactures and supplies bleached paperboards, and consumer and parent roll tissues in the United States and internationally. It operates through Pulp and Paperboard, and Consumer Products segments. The Pulp and Paperboard segment manufactures and markets bleached paperboard; Solid Bleached Sulfate paperboard that is used to produce folding cartons, liquid packaging, cups and plates, blister and carded packaging, and top sheet and commercial printing items; and hardwood and softwood pulp, as well as offers services that include custom sheeting, slitting, and cutting. It sells its products to carton converters, folding carton converters, merchants, and commercial printers. The Consumer Products segment provides a line of at-home tissue products, including bath tissues, paper towels, facial tissues, and napkins; recycled fiber value grade products; and away-from-home tissues. This segment sells its products to retailers, including grocery, club, mass merchants, and discount stores. The company was incorporated in 2005 and is based in Spokane, Washington.