Reviewing West Fraser Timber (NYSE:WFG) and Suzano (NYSE:SUZ)

Suzano (NYSE:SUZ) and West Fraser Timber (NYSE:WFG) are both materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Dividends

Suzano pays an annual dividend of $0.18 per share and has a dividend yield of 1.9%. West Fraser Timber pays an annual dividend of $1.28 per share and has a dividend yield of 1.9%. Suzano pays out 13.8% of its earnings in the form of a dividend. West Fraser Timber pays out -9.2% 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. West Fraser Timber has raised its dividend for 3 consecutive years. West Fraser Timber is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Suzano and West Fraser Timber”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Suzano	$8.97 billion	1.34	$2.40 billion	$1.30	7.44
West Fraser Timber	$5.46 billion	0.95	-$937.00 million	($13.84)	-4.78

Suzano has higher revenue and earnings than West Fraser Timber. West Fraser Timber is trading at a lower price-to-earnings ratio than Suzano, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

2.5% of Suzano shares are held by institutional investors. Comparatively, 40.2% of West Fraser Timber shares are held by institutional investors. 1.8% of West Fraser Timber shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Suzano and West Fraser Timber’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Suzano	15.98%	14.29%	4.11%
West Fraser Timber	-20.39%	-9.19%	-6.86%

Risk and Volatility

Suzano has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, West Fraser Timber has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Suzano and West Fraser Timber, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Suzano	0	2	2	0	2.50
West Fraser Timber	1	2	6	0	2.56

Suzano currently has a consensus target price of $13.20, indicating a potential upside of 36.43%. West Fraser Timber has a consensus target price of $83.80, indicating a potential upside of 26.69%. Given Suzano’s higher possible upside, equities research analysts clearly believe Suzano is more favorable than West Fraser Timber.

Summary

Suzano beats West Fraser Timber on 9 of the 17 factors compared between the two stocks.

About Suzano

Suzano (NYSE: SUZ) is a Brazilian company that produces eucalyptus pulp and paper products. Its portfolio includes pulp used in tissue, printing and writing paper, and packaging, as well as finished paper products such as tissue and consumer goods. The company also develops products and solutions made from renewable wood-based materials. Tracing its origins to 1924, Suzano helped pioneer the use of eucalyptus as a source of pulp. In 2019, it combined with pulp producer Fibria, expanding its scale and production operations.

About West Fraser Timber

West Fraser Timber Co. Ltd. is an integrated forest products company headquartered in Vancouver, British Columbia. Founded in 1955 as a sawmill in Quesnel, the company has grown into a producer of wood-based building materials and other forest products. Its products include lumber, oriented strand board (OSB), plywood, medium-density fibreboard, laminated veneer lumber, pulp, paper and related products. West Fraser also uses wood residuals to produce items such as wood chips and renewable energy.