Graphic Packaging Holding (NYSE: GPK) and KapStone Paper and Packaging Corporation (NYSE:KS) are both mid-cap industrial products companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitabiliy, analyst recommendations, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Graphic Packaging Holding and KapStone Paper and Packaging Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Graphic Packaging Holding 0 2 8 0 2.80
KapStone Paper and Packaging Corporation 0 6 5 0 2.45

Graphic Packaging Holding presently has a consensus price target of $15.73, suggesting a potential upside of 19.22%. KapStone Paper and Packaging Corporation has a consensus price target of $26.60, suggesting a potential upside of 16.16%. Given Graphic Packaging Holding’s stronger consensus rating and higher probable upside, equities analysts plainly believe Graphic Packaging Holding is more favorable than KapStone Paper and Packaging Corporation.

Profitability

This table compares Graphic Packaging Holding and KapStone Paper and Packaging Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Graphic Packaging Holding 3.98% 18.22% 4.24%
KapStone Paper and Packaging Corporation 2.39% 11.26% 3.10%

Institutional and Insider Ownership

95.9% of Graphic Packaging Holding shares are owned by institutional investors. Comparatively, 82.0% of KapStone Paper and Packaging Corporation shares are owned by institutional investors. 1.0% of Graphic Packaging Holding shares are owned by company insiders. Comparatively, 13.3% of KapStone Paper and Packaging Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Graphic Packaging Holding and KapStone Paper and Packaging Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Graphic Packaging Holding $4.32 billion 0.95 $690.10 million $0.55 23.98
KapStone Paper and Packaging Corporation $3.14 billion 0.71 $346.91 million $0.77 29.74

Graphic Packaging Holding has higher revenue and earnings than KapStone Paper and Packaging Corporation. Graphic Packaging Holding is trading at a lower price-to-earnings ratio than KapStone Paper and Packaging Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Graphic Packaging Holding has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, KapStone Paper and Packaging Corporation has a beta of 2.84, suggesting that its stock price is 184% more volatile than the S&P 500.

Dividends

Graphic Packaging Holding pays an annual dividend of $0.30 per share and has a dividend yield of 2.3%. KapStone Paper and Packaging Corporation pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. Graphic Packaging Holding pays out 54.5% of its earnings in the form of a dividend. KapStone Paper and Packaging Corporation pays out 51.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Graphic Packaging Holding beats KapStone Paper and Packaging Corporation on 11 of the 16 factors compared between the two stocks.

Graphic Packaging Holding Company Profile

Graphic Packaging Holding Company is a provider of paper-based packaging solutions for a range of products to food, beverage and other consumer product companies. The Company’s segments include Paperboard Mills, Americas Paperboard Packaging, Europe Paperboard Packaging, and Corporate and Other. The Paperboard Mills segment includes the Company’s North American paperboard mills, which produce primarily coated unbleached kraft and coated recycled board. As of December 31, 2016, the Company had seven paperboard mills in North America. The Americas Paperboard Packaging segment includes paperboard folding cartons sold primarily to consumer packaged goods (CPG) companies serving the food, beverage and consumer product markets in the Americas. The Europe Paperboard Packaging segment includes paperboard folding cartons sold primarily to CPG companies serving the food, beverage and consumer product markets in Europe. The Corporate and Other segment includes the Pacific Rim operating segment.

KapStone Paper and Packaging Corporation Company Profile

KapStone Paper and Packaging Corporation is a producer of containerboard and the kraft paper in North America. The Company operates through two segments: Paper and Packaging, and Distribution. The Paper and Packaging segment manufactures and sells a range of containerboard, corrugated products and specialty paper for industrial and consumer markets. The Distribution segment, which operates under the Victory and Golden State Container trade names, provides its customers packaging solutions and services and distributes corrugated packaging materials and other specialty packaging products, which include stretch film, void fill, carton sealing tape and other specialty tapes. The Company produces a range of products ranging from basic corrugated shipping containers to specialized packaging. The Company also produces packaging for fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.

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