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

Profitability

This table compares International Paper and MeadWestvaco Corp.’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%
MeadWestvaco Corp. 2.42% 3.90% 1.34%

Analyst Recommendations

This is a breakdown of current ratings for International Paper and MeadWestvaco Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
International Paper 2 4 6 0 2.33
MeadWestvaco Corp. 0 0 0 0 N/A

International Paper currently has a consensus target price of $58.78, indicating a potential upside of 8.27%. Given International Paper’s higher probable upside, analysts plainly believe International Paper is more favorable than MeadWestvaco Corp..

Institutional and Insider Ownership

83.7% of International Paper shares are held by institutional investors. 0.6% of International Paper shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 3.4%. MeadWestvaco Corp. does not pay 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. International Paper has increased its dividend for 5 consecutive years.

Valuation and Earnings

This table compares International Paper and MeadWestvaco Corp.’s 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 27.56
MeadWestvaco Corp. N/A N/A N/A N/A N/A

International Paper has higher revenue and earnings than MeadWestvaco Corp..

Summary

International Paper beats MeadWestvaco Corp. on 10 of the 11 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.

MeadWestvaco Corp. Company Profile

MeadWestvaco Corporation (MWV) is a global packaging company. The company’s segments include Food & Beverage, Home, Health & Beauty, Industrial, Specialty Chemicals, and Community Development and Land Management. The Food & Beverage segment produces packaging materials, and designs and produces packaging solutions for the food, food service, beverage, dairy, tobacco end markets and paperboard for commercial printing. The Home, Health & Beauty segment offers packaging solutions for the personal care, fragrance, home care, lawn and garden, prescription drug and healthcare end markets. The Industrial segment designs and produces corrugated packaging solutions, for produce, meat, consumer products and bulk goods. The Specialty Chemicals segment manufactures, markets and distributes specialty chemicals. The Community Development and Land Management segment is responsible for maximizing the value of its 94,000 development acres in the Charleston, South Carolina region.

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