International Paper (IP) versus Westrock (NYSE:WRK) Critical Analysis
International Paper (NYSE: IP) and Westrock (NYSE:WRK) are both large-cap basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitabiliy, analyst recommendations, valuation, earnings and institutional ownership.
This is a breakdown of current recommendations for International Paper and Westrock, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
International Paper presently has a consensus price target of $58.44, indicating a potential upside of 7.63%. Westrock has a consensus price target of $62.22, indicating a potential upside of 8.86%. Given Westrock’s stronger consensus rating and higher possible upside, analysts clearly believe Westrock is more favorable than International Paper.
Earnings and Valuation
This table compares International Paper and Westrock’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|International Paper||$21.93 billion||1.02||$3.23 billion||$1.97||27.56|
|Westrock||$14.31 billion||0.99||$2.15 billion||$1.64||34.85|
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.
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|
Volatility and Risk
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.
Insider & Institutional Ownership
83.0% of International Paper shares are owned by institutional investors. Comparatively, 89.2% of Westrock shares are owned by institutional investors. 0.6% of International Paper shares are owned by insiders. Comparatively, 2.7% of Westrock shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
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 2.8%. 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 increased its dividend for 5 consecutive years. International Paper is clearly the better dividend stock, given its higher yield and lower payout ratio.
International Paper beats Westrock on 10 of the 18 factors compared between the two stocks.
About International Paper
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, 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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