Packaging Corporation of America (PKG) & International Paper (IP) Critical Comparison
Packaging Corporation of America (NYSE: PKG) and International Paper (NYSE:IP) are both large-cap industrial products companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, risk, dividends, earnings, institutional ownership, analyst recommendations and valuation.
This is a summary of current recommendations and price targets for Packaging Corporation of America and International Paper, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Packaging Corporation of America||0||6||5||0||2.45|
Packaging Corporation of America currently has a consensus target price of $106.70, suggesting a potential downside of 2.16%. International Paper has a consensus target price of $59.78, suggesting a potential upside of 10.99%. Given International Paper’s higher possible upside, analysts plainly believe International Paper is more favorable than Packaging Corporation of America.
Earnings & Valuation
This table compares Packaging Corporation of America and International Paper’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Packaging Corporation of America||$6.08 billion||1.69||$1.22 billion||$5.19||21.01|
|International Paper||$21.93 billion||1.01||$3.22 billion||$1.97||27.34|
International Paper has higher revenue and earnings than Packaging Corporation of America. Packaging Corporation of America is trading at a lower price-to-earnings ratio than International Paper, indicating that it is currently the more affordable of the two stocks.
This table compares Packaging Corporation of America and International Paper’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Packaging Corporation of America||8.05%||27.78%||8.62%|
Risk & Volatility
Packaging Corporation of America has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500. Comparatively, International Paper has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500.
Insider and Institutional Ownership
88.6% of Packaging Corporation of America shares are owned by institutional investors. Comparatively, 83.0% of International Paper shares are owned by institutional investors. 1.2% of Packaging Corporation of America shares are owned by company insiders. Comparatively, 0.6% of International Paper shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Packaging Corporation of America pays an annual dividend of $2.52 per share and has a dividend yield of 2.3%. International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 3.4%. Packaging Corporation of America pays out 48.6% of its earnings in the form of 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. Packaging Corporation of America has raised its dividend for 5 consecutive years and International Paper has raised its dividend for 6 consecutive years. International Paper is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Packaging Corporation of America beats International Paper on 11 of the 17 factors compared between the two stocks.
About Packaging Corporation of America
Packaging Corporation of America (PCA) is a producer of containerboard products and uncoated freesheet. The Company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment produces a range of corrugated packaging products. The Paper segment manufactures and sells a range of papers, including communication-based papers and pressure sensitive papers. The Company’s containerboard mills produces linerboard and semi-chemical corrugating medium, which are papers primarily used in the production of corrugated products. The Company’s corrugated products manufacturing plants produce a range of corrugated packaging products, including conventional shipping containers used to protect and transport manufactured goods, multi-color boxes and displays. The Company also produces packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products.
About International Paper
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.
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