Critical Analysis: Mercer International (NASDAQ:MERC) & IT Tech Packaging (NYSE:ITP)

IT Tech Packaging (NYSE:ITP) and Mercer International (NASDAQ:MERC) are both small-cap materials companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.

Risk and Volatility

IT Tech Packaging has a beta of -0.24, suggesting that its stock price is 124% less volatile than the S&P 500. Comparatively, Mercer International has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.

Insider & Institutional Ownership

3.0% of IT Tech Packaging shares are owned by institutional investors. Comparatively, 85.8% of Mercer International shares are owned by institutional investors. 3.2% of IT Tech Packaging shares are owned by insiders. Comparatively, 1.2% of Mercer International shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares IT Tech Packaging and Mercer International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
IT Tech Packaging	-12.35%	-5.92%	-5.09%
Mercer International	-27.86%	-352.57%	-13.99%

Valuation & Earnings

This table compares IT Tech Packaging and Mercer International”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
IT Tech Packaging	$78.94 million	0.03	-$9.95 million	($1.02)	-0.15
Mercer International	$1.86 billion	0.01	-$497.89 million	($7.73)	-0.05

IT Tech Packaging has higher earnings, but lower revenue than Mercer International. IT Tech Packaging is trading at a lower price-to-earnings ratio than Mercer International, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for IT Tech Packaging and Mercer International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
IT Tech Packaging	0	0	0	0	0.00
Mercer International	4	2	0	0	1.33

Mercer International has a consensus price target of $1.13, suggesting a potential upside of 215.64%. Given Mercer International’s stronger consensus rating and higher probable upside, analysts clearly believe Mercer International is more favorable than IT Tech Packaging.

Summary

IT Tech Packaging beats Mercer International on 7 of the 13 factors compared between the two stocks.

About IT Tech Packaging

IT Tech Packaging, Inc., together with its subsidiaries, engages in the production and distribution of paper products in the People's Republic of China. The company operates through three segments: Dongfang Paper, Tengsheng Paper, and Baoding Shengde. It offers corrugating medium papers to companies making corrugating cardboards; and offset printing papers to printing companies. The company also provides tissue paper products, including toilet papers, boxed and soft-packed tissues, handkerchief tissues, and paper napkins, as well as bathroom and kitchen paper towels under the Dongfang Paper brand. In addition, it produces and sells non-medical single-use face masks, and medical face masks. The company was formerly known as Orient Paper, Inc. and changed its name to IT Tech Packaging, Inc. in August 2018. The company is headquartered in Baoding, the People's' Republic of China.

About Mercer International

Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) and northern bleached hardwood kraft (NBHK) pulp worldwide. The company operates through two segments, Pulp and Solid Wood. It manufactures, sells, and distributes pulp, electricity, and chemicals through pulp mills. The company also manufactures, distributes, and sells lumber, cross-laminated timber, finger joint lumber, glue-laminated timber, wood pallets, electricity, biofuels, and wood residuals. In addition, it generates and sells green energy produced from biomass cogeneration power plant to third party. Further, it produces and sells NBSK pulp manufactured from softwood; green energy using carbon-neutral biofuels, such as black liquor and wood waste; tall oil from black liquor for use as a chemical additive and green energy source; bio extractives and biomaterials, including lignin, turpentine, cellulose filaments, and sandalwood oil; and biofuels; as well as provides transportation and logistics services. The company sells its pulp to pulp markets, integrated paper and paperboard manufacturers; and lumber products to distributors, construction firms, secondary manufacturers, retail yards, and home centers. Mercer International Inc. was founded in 1968 and is headquartered in Vancouver, Canada.