Fibria Celulose (NYSE: FBR) and Verso Corporation (NYSE:VRS) are both basic materials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitabiliy, dividends, earnings, risk and institutional ownership.

Profitability

This table compares Fibria Celulose and Verso Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fibria Celulose 10.55% 7.04% 2.98%
Verso Corporation 47.25% 581.15% 60.89%

Institutional and Insider Ownership

6.2% of Fibria Celulose shares are held by institutional investors. Comparatively, 58.6% of Verso Corporation shares are held by institutional investors. 40.2% of Fibria Celulose shares are held by company insiders. Comparatively, 4.2% of Verso Corporation shares are held by company 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.

Earnings and Valuation

This table compares Fibria Celulose and Verso Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fibria Celulose $2.85 billion 2.15 $919.20 million N/A N/A
Verso Corporation $2.57 billion 0.05 $140.00 million N/A N/A

Fibria Celulose has higher revenue and earnings than Verso Corporation.

Analyst Recommendations

This is a breakdown of current ratings for Fibria Celulose and Verso Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fibria Celulose 0 2 3 0 2.60
Verso Corporation 0 0 2 0 3.00

Fibria Celulose presently has a consensus price target of $10.20, indicating a potential downside of 7.94%. Verso Corporation has a consensus price target of $18.13, indicating a potential upside of 357.70%. Given Verso Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Verso Corporation is more favorable than Fibria Celulose.

Dividends

Fibria Celulose pays an annual dividend of $0.19 per share and has a dividend yield of 1.7%. Verso Corporation does not pay a dividend.

About Fibria Celulose

Fibria Celulose S.A. (Fibria) is a forestry company, which is engaged in the production of eucalyptus pulp. The Company is engaged in the production and sale of short fiber pulp from its pulp production facilities located in the cities of Aracruz (State of Espirito Santo), Tres Lagoas (State of Mato Grosso do Sul), Jacarei (State of Sao Paulo) and Eunapolis (State of Bahia). The Company’s activities are focused on the growth of renewable and forests, and the manufacture and sale of bleached eucalyptus kraft pulp. The Company’s annual production capacity is approximately 5.3 million tons of pulp. Fibria has over 969,000 hectares of forests, with approximately 568,000 hectares of planted forests, over 338,000 hectares of environmental preservation and conservation areas, and approximately 63,000 hectares destined for other uses. The pulp produced by Fibria is exported to approximately 40 countries. The pulp produced for export is delivered to customers by sea and through various ports.

About Verso Corporation

Verso Corporation is a producer of coated papers, which are used in magazines, catalogs, advertising brochures and annual reports, among other media and marketing publications. The Company operates through two segments: paper and pulp. The Paper segment includes paper products, which are used in media and marketing applications, including catalogs, magazines, and commercial printing applications, such as advertising brochures, annual reports and direct-mail advertising. The Pulp segment includes pulp products, which are used to manufacture printing, writing, and specialty paper grades and tissue products. The Company produces a range of products, ranging from coated freesheet and coated groundwood, to inkjet and digital paper, supercalendered papers and uncoated freesheet. It also produces and sells market kraft pulp, which is used to manufacture printing and writing paper grades and tissue products. The Company also produces and sells Northern Bleached Hardwood Kraft (NBHK) pulp.

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