Avery Dennison (NYSE: AVY) and Sappi (OTCMKTS:SPPJY) are both mid-cap industrial products companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.
This table compares Avery Dennison and Sappi’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Avery Dennison has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Sappi has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500.
Insider & Institutional Ownership
85.9% of Avery Dennison shares are held by institutional investors. Comparatively, 0.0% of Sappi shares are held by institutional investors. 1.3% of Avery Dennison shares are held by insiders. Comparatively, 0.7% of Sappi shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This is a breakdown of recent ratings and price targets for Avery Dennison and Sappi, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Avery Dennison currently has a consensus target price of $122.63, suggesting a potential upside of 17.01%. Given Avery Dennison’s higher probable upside, analysts plainly believe Avery Dennison is more favorable than Sappi.
Valuation and Earnings
This table compares Avery Dennison and Sappi’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Avery Dennison||$6.61 billion||1.39||$281.80 million||$5.00||20.96|
|Sappi||$5.30 billion||0.63||$338.00 million||$0.64||9.72|
Sappi has lower revenue, but higher earnings than Avery Dennison. Sappi is trading at a lower price-to-earnings ratio than Avery Dennison, indicating that it is currently the more affordable of the two stocks.
Avery Dennison pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Sappi pays an annual dividend of $0.14 per share and has a dividend yield of 2.3%. Avery Dennison pays out 36.0% of its earnings in the form of a dividend. Sappi pays out 21.9% 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. Avery Dennison has raised its dividend for 7 consecutive years. Sappi is clearly the better dividend stock, given its higher yield and lower payout ratio.
Avery Dennison beats Sappi on 12 of the 16 factors compared between the two stocks.
Avery Dennison Company Profile
Avery Dennison Corporation produces and sells pressure-sensitive materials worldwide. The company's Label and Graphic Materials segment offers pressure-sensitive label and packaging materials; and graphics and reflective products under the Fasson, JAC, Avery Dennison, and Mactac brands. It also offers durable cast and reflective films. This segment offers its products to the home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits, and food market segments; architectural, commercial sign, digital printing, and other related market segments; construction, automotive, and fleet transportation market segments, as well as traffic and safety applications; and sign shops, commercial printers, and designers. Its Retail Branding and Information Solutions segment designs, manufactures, and sells various branding and information solutions, including creative services, brand embellishments, graphic tickets, tags and labels, and sustainable packaging solutions; item-level radio-frequency identification solutions; visibility and loss prevention solutions; price ticketing and marking solutions; care, content, and country of origin compliance solutions; and brand protection and security solutions. This segment serves retailers, brand owners, apparel manufacturers, distributors, and industrial customers. The company's Industrial and Healthcare Materials segment offers tapes and fasteners; medical pressure-sensitive adhesive based materials and products; and performance polymers under the Fasson, Avery Dennison, Yongle, and Vancive brand names. This segment serves automotive, electronics, building and construction, personal care, and other industrial segments, as well as converters, original equipment manufacturers, and medical device manufacturers. The company was formerly known as Avery International Corporation and changed its name to Avery Dennison Corporation in 1990. The company was founded in 1935 and is headquartered in Glendale, California.
Sappi Company Profile
Sappi Limited is a woodfiber company focused on providing graphic/printing papers, packaging and specialty papers, dissolving wood pulp (DWP), as well as products in adjacent fields, including nanocellulose and lignosulfonate. The Company’s segments include North America, Europe and Southern Africa. Its range of graphic paper products is used by printers in the production of books, brochures, magazines, catalogues, direct mail and various other print applications; packaging and specialty papers are used in the manufacture of such products as soup sachets, carry bags, cosmetic and confectionery packaging, boxes for agricultural products for export, tissue wadding for household tissue products and casting release papers used by suppliers to the fashion, textiles, automobile and household industries, and DWP products are used around the world by converters to create viscose fiber for clothing and textiles, pharmaceutical products, as well as a range of consumer and household products.
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