Resolute Forest Products (NYSE: RFP) and Clearwater Paper Corporation (NYSE:CLW) are both small-cap basic materials companies, but which is the better stock? We will contrast the two companies based on the strength of their profitabiliy, institutional ownership, dividends, risk, earnings, analyst recommendations and valuation.

Institutional and Insider Ownership

89.1% of Resolute Forest Products shares are owned by institutional investors. Comparatively, 86.5% of Clearwater Paper Corporation shares are owned by institutional investors. 0.8% of Resolute Forest Products shares are owned by insiders. Comparatively, 2.4% of Clearwater Paper Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Resolute Forest Products and Clearwater Paper Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resolute Forest Products 2 2 0 0 1.50
Clearwater Paper Corporation 0 3 3 0 2.50

Resolute Forest Products currently has a consensus price target of $4.67, indicating a potential upside of 3.70%. Clearwater Paper Corporation has a consensus price target of $70.67, indicating a potential upside of 59.16%. Given Clearwater Paper Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe Clearwater Paper Corporation is more favorable than Resolute Forest Products.

Volatility and Risk

Resolute Forest Products has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Clearwater Paper Corporation has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Earnings & Valuation

This table compares Resolute Forest Products and Clearwater Paper Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Resolute Forest Products $3.54 billion 0.11 $289.00 million ($1.34) -3.36
Clearwater Paper Corporation $1.74 billion 0.42 $181.12 million $2.27 19.56

Resolute Forest Products has higher revenue and earnings than Clearwater Paper Corporation. Resolute Forest Products is trading at a lower price-to-earnings ratio than Clearwater Paper Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Resolute Forest Products and Clearwater Paper Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Resolute Forest Products -3.39% -0.44% -0.19%
Clearwater Paper Corporation 2.23% 10.34% 3.05%

Summary

Clearwater Paper Corporation beats Resolute Forest Products on 9 of the 13 factors compared between the two stocks.

About Resolute Forest Products

Resolute Forest Products Inc. operates in the forest products industry. It offers a range of forest products, including market pulp, tissue, wood products, newsprint and specialty papers. As of December 31, 2016, it owned or operated over 40 pulp, paper, tissue and wood products facilities in the United States and Canada. Its segments include market pulp, tissue, wood products, newsprint and specialty papers. As of December 31, 2016, it produced market pulp at seven facilities in North America, with total capacity of approximately 1.7 million metric tons. As of December 31, 2016, it produced tissue products at two facilities in North America, both located in Florida. As of December 31, 2016, it operated 16 sawmills in Canada that produces construction-grade lumber sold in North America, on the east coast. As of December 31, 2016, it produced newsprint at 10 facilities in North America. As of December 31, 2016, it produced specialty papers at five facilities in North America.

About Clearwater Paper Corporation

Clearwater Paper Corporation manufactures consumer tissue, away-from-home (AFH) tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The Company operates through two segments: Consumer Products segment, and Pulp and Paperboard segment. The Company’s Consumer Products segment manufactures and sells a line of at-home tissue products, as well as AFH products. The Company’s Pulp and Paperboard segment manufactures and markets bleached paperboard for the packaging industry. It is a producer of solid bleach sulfate (SBS) paperboard. The Company is a supplier of private label tissue to a range of retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores. In addition, the Company produces bleached paperboard used by printers and packaging converters, and offers services that include custom sheeting, slitting and cutting.

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