Head-To-Head Contrast: Canfor Pulp Products (OTCMKTS:CFPUF) and Mercer International (NASDAQ:MERC)

Canfor Pulp Products (OTCMKTS:CFPUF) and Mercer International (NASDAQ:MERC) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Analyst Ratings

This is a summary of current ratings and price targets for Canfor Pulp Products and Mercer International, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Canfor Pulp Products	0	1	0	0	2.00
Mercer International	0	4	0	0	2.00

Mercer International has a consensus price target of $9.38, indicating a potential upside of 65.05%. Given Mercer International’s higher probable upside, analysts clearly believe Mercer International is more favorable than Canfor Pulp Products.

Insider and Institutional Ownership

74.1% of Canfor Pulp Products 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, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Canfor Pulp Products and Mercer International’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Canfor Pulp Products	N/A	N/A	N/A	$1.17	0.50
Mercer International	$1.99 billion	0.19	-$242.06 million	($3.43)	-1.66

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

Dividends

Canfor Pulp Products pays an annual dividend of $0.23 per share and has a dividend yield of 38.8%. Mercer International pays an annual dividend of $0.30 per share and has a dividend yield of 5.3%. Canfor Pulp Products pays out 19.2% 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.

Profitability

This table compares Canfor Pulp Products and Mercer International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Canfor Pulp Products	N/A	N/A	N/A
Mercer International	-9.90%	-17.93%	-4.07%

Summary

Canfor Pulp Products beats Mercer International on 6 of the 11 factors compared between the two stocks.

About Canfor Pulp Products

Canfor Pulp Products Inc., together with its subsidiaries, produces and supplies pulp and paper products in Canada, Europe, Asia, the United States, and internationally. It operates in two segments, Pulp and Paper. The company offers solid wood; bleached and unbleached softwood kraft pulps; and bleached, unbleached, and colored kraft papers. It also produces green energy. The company is headquartered in Vancouver, Canada. Canfor Pulp Products Inc. operates as a subsidiary of Canadian Forest Products Ltd.

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.