Neenah (NYSE: NP) and Domtar Paper (NYSE:UFS) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, risk, profitability, institutional ownership, valuation and analyst recommendations.
Valuation and Earnings
This table compares Neenah and Domtar Paper’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Neenah||$979.90 million||1.36||$80.30 million||$4.32||18.26|
|Domtar Paper||$5.16 billion||0.55||-$258.00 million||$2.60||17.26|
This table compares Neenah and Domtar Paper’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Neenah pays an annual dividend of $1.64 per share and has a dividend yield of 2.1%. Domtar Paper pays an annual dividend of $1.74 per share and has a dividend yield of 3.9%. Neenah pays out 38.0% of its earnings in the form of a dividend. Domtar Paper pays out 66.9% 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. Neenah has increased its dividend for 7 consecutive years and Domtar Paper has increased its dividend for 8 consecutive years. Domtar Paper is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
93.3% of Neenah shares are held by institutional investors. Comparatively, 94.5% of Domtar Paper shares are held by institutional investors. 2.0% of Neenah shares are held by company insiders. Comparatively, 1.0% of Domtar Paper shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This is a breakdown of recent ratings and target prices for Neenah and Domtar Paper, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Domtar Paper has a consensus target price of $43.45, suggesting a potential downside of 3.18%. Given Domtar Paper’s stronger consensus rating and higher probable upside, analysts clearly believe Domtar Paper is more favorable than Neenah.
Volatility & Risk
Neenah has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, Domtar Paper has a beta of 1.62, meaning that its share price is 62% more volatile than the S&P 500.
Neenah beats Domtar Paper on 9 of the 17 factors compared between the two stocks.
Neenah Company Profile
Neenah, Inc. produces and sells technical products, and fine paper and packaging products worldwide. The company's Technical Products segment offers filtration media for transportation, water, and other uses; saturated and unsaturated crepe, and flat paper tapes to manufacturers; and coated lightweight abrasive paper for automotive, construction, metal, and woodworking industries. It also provides digital image transfer media; label and tag products for variable and digital printing; latex saturated and coated papers; premask, medical packaging, publishing, and security papers; and clean room and durable printing papers, release papers, and furniture backers. Its Fine Paper and Packaging segment manufactures and sells premium writing, text, cover, and specialty papers and envelopes used in commercial printing services, corporate identity packages, and advertising collaterals. This segment also provides premium packaging products for retail, cosmetics, spirits, and electronics end-use markets; bright papers for direct mail, advertising insert, scrapbook, and marketing collateral applications; and business papers for professionals and small businesses, as well as translucent and art papers, papers for optical scanning, and other specialized applications. The company markets its products under the JET-PRO SofStretch, KIMDURA, PREVAIL, NEENAH, GESSNER, CLASSIC, CLASSIC CREST, ESSE, ENVIRONMENT, CAPITOL BOND, ROYAL SUNDANCE, SOUTHWORTH, TOUCHE, CRANE'S CREST, CRANE'S BOND, CRANE'S LETTRA, SO…SILK, PLIKE, STARDREAM, CONVERD, ESTATE LABEL, Neenah, PELLAQ, KIVAR, SKIVERTEX, ILLUSIO, SENZO, ASTROBRIGHTS, and CREATIVE COLLECTION names. It sells its products through authorized paper distributors, converters, retailers, specialty businesses, and direct sales. The company was formerly known as Neenah Paper, Inc. and changed its name to Neenah, Inc. in January 2018. Neenah, Inc. was founded in 2004 and is headquartered in Alpharetta, Georgia.
Domtar Paper Company Profile
Domtar Corporation designs, manufactures, markets, and distributes various communication papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally. It operates in two segments, Pulp and Paper, and Personal Care. The company offers business papers, including copy and electronic imaging papers for use with inkjet and laser printers, photocopiers, and plain-paper fax machines, as well as computer papers, preprinted forms, and digital papers for office and home use. It also provides commercial printing and publishing papers, such as offset papers and opaques for sheet and roll fed offset presses; publishing papers comprising tradebook and lightweight uncoated papers for publishing textbooks, dictionaries, catalogs, magazines, hard cover novels, and financial documents; and base papers that are converted into envelopes, tablets, business forms, and data processing/computer forms. In addition, the company offers papers for thermal and flexible packaging, food and medical packaging, medical gowns and drapes, sandpaper backing, carbonless printing, label, and other coating and laminating applications; and papers for industrial and specialty applications that include carrier and treated papers, security papers, and specialized printing and converting applications. Further, it provides softwood, fluff, and hardwood Kraft products for various end products. Additionally, the company offers absorbent hygiene products, which comprise adult incontinence products under the Attends, IncoPack, Indasec, and Reassure brand; and branded and private label briefs, protective underwear, underpads, pads, and washcloths, as well as baby diapers, youth pants, and infant training pants for healthcare, retail, and direct-to-consumer channels. It serves merchants, retail outlets, stationers, printers, publishers, converters, and end-users. The company was incorporated in 2006 and is based in Fort Mill, South Carolina.
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