Nine Dragons Paper (OTCMKTS:NDGPF) & Mercer International (NASDAQ:MERC) Financial Contrast

Nine Dragons Paper (OTCMKTS:NDGPF) and Mercer International (NASDAQ:MERC) are both basic materials companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, dividends, profitability and risk.

Insider and Institutional Ownership

13.8% of Nine Dragons Paper shares are owned by institutional investors. Comparatively, 85.8% of Mercer International shares are owned by institutional investors. 4.2% of Mercer International shares are owned 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Nine Dragons Paper and Mercer International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nine Dragons Paper	0	0	0	0	N/A
Mercer International	0	4	0	0	2.00

Mercer International has a consensus price target of $9.38, indicating a potential upside of 49.52%. Given Mercer International’s higher probable upside, analysts clearly believe Mercer International is more favorable than Nine Dragons Paper.

Profitability

This table compares Nine Dragons Paper and Mercer International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nine Dragons Paper	N/A	N/A	N/A
Mercer International	-11.27%	-26.21%	-6.47%

Dividends

Nine Dragons Paper pays an annual dividend of $0.10 per share and has a dividend yield of 26.5%. Mercer International pays an annual dividend of $0.30 per share and has a dividend yield of 4.8%. Nine Dragons Paper pays out 26.4% of its earnings in the form of a dividend. Mercer International pays out -8.7% 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.

Valuation & Earnings

This table compares Nine Dragons Paper and Mercer International’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nine Dragons Paper	N/A	N/A	N/A	$0.38	0.99
Mercer International	$1.99 billion	0.21	-$242.06 million	($3.43)	-1.83

Nine Dragons Paper has higher earnings, but lower revenue than Mercer International. Mercer International is trading at a lower price-to-earnings ratio than Nine Dragons Paper, indicating that it is currently the more affordable of the two stocks.

Summary

Nine Dragons Paper beats Mercer International on 6 of the 11 factors compared between the two stocks.

About Nine Dragons Paper

Nine Dragons Paper (Holdings) Limited, together with its subsidiaries, engages in the production and sale of packaging paper, recycled printing and writing paper, and specialty paper and pulp products in the People's Republic of China. The company offers linerboard products, including kraft, test, white top, and coated linerboards; corrugating medium containerboard products; corrugated cardboard products; carton box products; corrugated sheet products; and coated duplex boards. It also provides recycled printing and writing paper, such as uncoated wood-free paper and office paper; capacitor tissue paper; low and high voltage, ultra-high-voltage transformer coil winding, and heat-resistant insulating paper; and recycled and kraft pulp products. It also operates in Vietnam, Malaysia, and the United States. The company was founded in 1995 and is headquartered in Dongguan, the People's Republic of China. Nine Dragons Paper (Holdings) Limited operates as a subsidiary of Best Result Holdings Limited.

About Mercer International

Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) and northern bleached hardwood kraft (NBHK) pulp worldwide. The company operates through two segments, Pulp and Solid Wood. It manufactures, sells, and distributes pulp, electricity, and chemicals through pulp mills. The company also manufactures, distributes, and sells lumber, cross-laminated timber, finger joint lumber, glue-laminated timber, wood pallets, electricity, biofuels, and wood residuals. In addition, it generates and sells green energy produced from biomass cogeneration power plant to third party. Further, it produces and sells NBSK pulp manufactured from softwood; green energy using carbon-neutral biofuels, such as black liquor and wood waste; tall oil from black liquor for use as a chemical additive and green energy source; bio extractives and biomaterials, including lignin, turpentine, cellulose filaments, and sandalwood oil; and biofuels; as well as provides transportation and logistics services. The company sells its pulp to pulp markets, integrated paper and paperboard manufacturers; and lumber products to distributors, construction firms, secondary manufacturers, retail yards, and home centers. Mercer International Inc. was founded in 1968 and is headquartered in Vancouver, Canada.