Boise (NYSE: BZ) and Mercer International (NASDAQ:MERC) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, earnings, analyst recommendations, risk and profitability.
This table compares Boise and Mercer International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
79.0% of Mercer International shares are held by institutional investors. 4.9% of Mercer International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Earnings and Valuation
This table compares Boise and Mercer International’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Mercer International||$931.62 million||0.94||$34.94 million||$0.72||18.75|
Mercer International has higher revenue and earnings than Boise. Boise is trading at a lower price-to-earnings ratio than Mercer International, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and target prices for Boise and Mercer International, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Mercer International has a consensus target price of $16.19, suggesting a potential upside of 19.91%.
Mercer International pays an annual dividend of $0.46 per share and has a dividend yield of 3.4%. Boise does not pay a dividend. Mercer International pays out 63.9% of its earnings in the form of a dividend.
Mercer International beats Boise on 9 of the 10 factors compared between the two stocks.
Boise Inc. is a manufacturer of packaging and paper products, including corrugated containers and sheets, containerboard, protective packaging products, imaging papers for the office and home, printing and converting papers, label and release papers, newsprint and market pulp. The Company operates in the United States, Europe, Mexico, and Canada. The Company operates in three segments: Packaging, Paper, and Corporate and Other. The Company’s newsprint is sold primarily to newspaper publishers in the southern and southwestern the United States. During the year ended December 31, 2012, approximately 38% of the Company’s uncoated freesheet paper was sold to OfficeMax Incorporated, its customer. In October 2013, Packaging Corporation of America acquired Boise Inc.
About Mercer International
Mercer International Inc. is a producer of northern bleached softwood kraft (NBSK) pulp, which is pulp that is sold on the open market. The Company also produces and sells tall oil, a by-product of its production process, which is used as both a chemical additive and as a green energy source. It produces and sells NBSK pulp, which is a bleached kraft pulp manufactured using northern softwood. As of December 31, 2016, the Company operated two mills in Eastern Germany and one mill in Western Canada. As of December 31, 2016, its three NBSK pulp mills had consolidated annual production capacity of approximately 1.5 million air-dried metric tons (ADMTs) of NBSK pulp and were capable of generating 305 megawatts (MW) of electricity. Additionally, its German mills generate tall oil from black liquor, which is sold to third parties for use in various applications, including bio-fuels. The Company’s mills generate and sell energy to regional utilities.
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