Boise (NYSE: BZ) and Domtar (NYSE:UFS) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Dividends

Domtar pays an annual dividend of $1.66 per share and has a dividend yield of 3.5%. Boise does not pay a dividend. Domtar pays out 59.5% of its earnings in the form of a dividend. Boise has raised its dividend for 7 consecutive years.

Profitability

This table compares Boise and Domtar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Boise N/A N/A N/A
Domtar 3.44% 6.17% 2.99%

Valuation & Earnings

This table compares Boise and Domtar’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Boise N/A N/A N/A $0.14 N/A
Domtar $5.10 billion 0.59 $128.00 million $2.79 17.15

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

Insider and Institutional Ownership

91.4% of Domtar shares are held by institutional investors. 1.0% of Domtar shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Boise and Domtar, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Boise 0 0 0 0 N/A
Domtar 3 5 3 0 2.00

Domtar has a consensus price target of $42.44, indicating a potential downside of 11.28%.

Summary

Domtar beats Boise on 9 of the 11 factors compared between the two stocks.

Boise Company Profile

Boise Inc. is a manufacturer of packaging and paper products, including corrugated containers and sheets, containerboard, protective packaging products, imaging papers for the office and home, printing and converting papers, label and release papers, newsprint and market pulp. The Company operates in the United States, Europe, Mexico, and Canada. The Company operates in three segments: Packaging, Paper, and Corporate and Other. The Company’s newsprint is sold primarily to newspaper publishers in the southern and southwestern the United States. During the year ended December 31, 2012, approximately 38% of the Company’s uncoated freesheet paper was sold to OfficeMax Incorporated, its customer. In October 2013, Packaging Corporation of America acquired Boise Inc.

Domtar Company Profile

Domtar Corporation designs, manufactures, markets and distributes a range of fiber-based products, including communication papers, specialty and packaging papers and absorbent hygiene products. The Company segments include Pulp and Paper and Personal Care. The Pulp and Paper segment consists of the design, manufacturing, marketing and distribution of communication, specialty and packaging papers, as well as softwood, fluff and hardwood market pulp. The Personal Care segment consists of the design, manufacturing, marketing and distribution of absorbent hygiene products. The Company is a marketer of uncoated freesheet paper in North America serving a range of customers, including merchants, retail outlets, stationers, printers, publishers, converters and end users. It is also a marketer and producer of a line of incontinence care products, as well as infant diapers. It has a network of wood fiber converting assets that produce paper grade, fluff and specialty pulp.

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