Comparing Packaging Corporation of America (PKG) & International Paper (IP)
Packaging Corporation of America (NYSE: PKG) and International Paper (NYSE:IP) are both large-cap industrial products companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.
Risk and Volatility
Packaging Corporation of America has a beta of 1.86, suggesting that its share price is 86% more volatile than the S&P 500. Comparatively, International Paper has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Packaging Corporation of America and International Paper, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Packaging Corporation of America||0||6||4||0||2.40|
Packaging Corporation of America currently has a consensus price target of $104.33, suggesting a potential downside of 2.79%. International Paper has a consensus price target of $58.44, suggesting a potential upside of 11.94%. Given International Paper’s higher possible upside, analysts plainly believe International Paper is more favorable than Packaging Corporation of America.
Packaging Corporation of America pays an annual dividend of $2.52 per share and has a dividend yield of 2.3%. International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 3.5%. Packaging Corporation of America pays out 48.6% of its earnings in the form of a dividend. 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 has increased its dividend for 6 consecutive years and International Paper has increased its dividend for 5 consecutive years.
Earnings and Valuation
This table compares Packaging Corporation of America and International Paper’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Packaging Corporation of America||$6.08 billion||1.67||$1.22 billion||$5.19||20.68|
|International Paper||$21.93 billion||0.98||$3.22 billion||$1.97||26.50|
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.
Insider and Institutional Ownership
88.3% of Packaging Corporation of America shares are owned by institutional investors. Comparatively, 83.0% of International Paper shares are owned by institutional investors. 1.2% of Packaging Corporation of America shares are owned by company insiders. Comparatively, 0.6% of International Paper shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This table compares Packaging Corporation of America and International Paper’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Packaging Corporation of America||8.05%||27.78%||8.62%|
Packaging Corporation of America beats International Paper on 12 of the 17 factors compared between the two stocks.
About Packaging Corporation of America
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.
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.
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