Mercer International (NASDAQ: MERC) and Veritiv (NYSE:VRTV) are both small-cap basic materials companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.
Institutional & Insider Ownership
76.6% of Mercer International shares are held by institutional investors. Comparatively, 94.3% of Veritiv shares are held by institutional investors. 4.9% of Mercer International shares are held by insiders. Comparatively, 0.8% of Veritiv shares are held by 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 table compares Mercer International and Veritiv’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Mercer International has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500. Comparatively, Veritiv has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500.
Earnings & Valuation
This table compares Mercer International and Veritiv’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Mercer International||$1.17 billion||0.74||$70.48 million||N/A||N/A|
|Veritiv||$8.36 billion||0.07||-$13.30 million||($0.85)||-42.18|
Mercer International has higher earnings, but lower revenue than Veritiv.
Mercer International pays an annual dividend of $0.50 per share and has a dividend yield of 3.8%. Veritiv does not pay a dividend.
This is a breakdown of recent recommendations for Mercer International and Veritiv, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Mercer International presently has a consensus price target of $16.19, suggesting a potential upside of 21.71%. Veritiv has a consensus price target of $34.75, suggesting a potential downside of 3.07%. Given Mercer International’s stronger consensus rating and higher possible upside, equities analysts clearly believe Mercer International is more favorable than Veritiv.
Mercer International beats Veritiv on 12 of the 14 factors compared between the two stocks.
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.
Veritiv Corporation operates as a business-to-business distributor of packaging, facility solutions, print, and publishing products and services in the United States, Canada, and internationally. It operates through four segments: Packaging, Facility Solutions, Print, and Publishing. The Packaging segment offers standard and custom packaging solutions. The Facility Solutions segment sources and sells cleaning, break-room, and other supplies, such as towels, tissues, wipers and dispensers, can liners, commercial cleaning chemicals, soaps and sanitizers, sanitary maintenance supplies and equipment, safety and hazard supplies, and shampoos and amenities. The Print segment sells and distributes commercial printing, writing, copying, digital, wide format, and specialty paper products; and graphics consumables and equipment. It also provides customized paper conversion services of commercial printing paper for distribution to document centers and form printers. The Publishing segment sells and distributes coated and uncoated commercial printing papers to publishers, retailers, converters, printers, and specialty businesses for use in magazines, catalogs, books, directories, gaming, couponing, retail inserts, and direct mail. This segment also provides print management, procurement, and supply chain management solutions. The company also offers logistics and supply chain management solutions. It offers its products under the Endurance, nordic+, Econosource, Comet, Starbrite Opaque Select, TUFflex, Reliable, and Spring Grove brands, as well as other brands to printers, publishers, data centers, manufacturers, higher education institutions, healthcare facilities, sporting and performance arenas, retail stores, government agencies, property managers, and building service contractors. As of March 1, 2018, the company operated 170 distribution centers. Veritiv Corporation was incorporated in 2013 and is based in Atlanta, Georgia.
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