Fibria (NYSE: FBR) and Domtar Paper (NYSE:UFS) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, valuation, earnings, dividends and profitability.
Volatility & Risk
Fibria has a beta of -0.13, suggesting that its share price is 113% less volatile than the S&P 500. Comparatively, Domtar Paper has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500.
7.3% of Fibria shares are owned by institutional investors. Comparatively, 95.2% of Domtar Paper shares are owned by institutional investors. 40.2% of Fibria shares are owned by insiders. Comparatively, 1.0% of Domtar Paper shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Fibria and Domtar Paper’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Fibria||$3.68 billion||2.88||$339.90 million||$0.61||31.36|
|Domtar Paper||$5.16 billion||0.56||-$258.00 million||$2.60||17.58|
Fibria has higher earnings, but lower revenue than Domtar Paper. Domtar Paper is trading at a lower price-to-earnings ratio than Fibria, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings for Fibria and Domtar Paper, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Fibria presently has a consensus price target of $16.25, suggesting a potential downside of 15.05%. Domtar Paper has a consensus price target of $43.45, suggesting a potential downside of 4.91%. Given Domtar Paper’s stronger consensus rating and higher probable upside, analysts plainly believe Domtar Paper is more favorable than Fibria.
This table compares Fibria and Domtar Paper’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Fibria pays an annual dividend of $0.19 per share and has a dividend yield of 1.0%. Domtar Paper pays an annual dividend of $1.74 per share and has a dividend yield of 3.8%. Fibria pays out 31.1% 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. Domtar Paper has raised 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.
Domtar Paper beats Fibria on 10 of the 17 factors compared between the two stocks.
Fibria Company Profile
Fibria Celulose S.A. produces, sells, and exports short fiber pulp in Brazil and internationally. It manufactures and sells bleached eucalyptus kraft pulp. The company has approximately 1,056,000 hectares of forest base in the states of São Paulo, Minas Gerais, Rio de Janeiro, Espírito Santo, Mato Grosso do Sul, and Bahia. It also exports its products to approximately 35 countries for educational, health, hygiene, and cleaning products. The company was formerly known as Votorantim Celulose e Papel S.A. and changed its name to Fibria Celulose S.A. in November 2009. Fibria Celulose S.A. was founded in 1988 and is headquartered in São Paulo, Brazil.
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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