Head-To-Head Survey: West Fraser Timber (NYSE:WFG) versus Klabin (OTCMKTS:KLBAY)

Klabin (OTCMKTS:KLBAY) and West Fraser Timber (NYSE:WFG) are both materials companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Dividends

Klabin pays an annual dividend of $0.17 per share and has a dividend yield of 2.2%. West Fraser Timber pays an annual dividend of $1.28 per share and has a dividend yield of 1.9%. Klabin pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. West Fraser Timber pays out -8.3% of its earnings in the form of a dividend. West Fraser Timber has increased its dividend for 3 consecutive years.

Volatility and Risk

Klabin has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, West Fraser Timber has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Insider & Institutional Ownership

40.2% of West Fraser Timber shares are owned by institutional investors. 1.8% of West Fraser Timber shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Klabin and West Fraser Timber’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Klabin	1.26%	1.79%	0.43%
West Fraser Timber	-22.98%	-10.84%	-8.19%

Valuation and Earnings

This table compares Klabin and West Fraser Timber”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Klabin	$3.71 billion	6.45	$251.30 million	$0.17	45.03
West Fraser Timber	$5.24 billion	1.03	-$937.00 million	($15.44)	-4.47

Klabin has higher earnings, but lower revenue than West Fraser Timber. West Fraser Timber is trading at a lower price-to-earnings ratio than Klabin, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Klabin and West Fraser Timber, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Klabin	0	2	0	1	2.67
West Fraser Timber	1	3	4	0	2.38

West Fraser Timber has a consensus price target of $83.20, suggesting a potential upside of 20.50%. Given West Fraser Timber’s higher possible upside, analysts plainly believe West Fraser Timber is more favorable than Klabin.

Summary

Klabin beats West Fraser Timber on 10 of the 18 factors compared between the two stocks.

About Klabin

Klabin S.A., together with its subsidiaries, produces and exports packaging paper and sustainable paper packaging solutions in Brazil and internationally. The company engages in the planting of pine and eucalyptus; and forestry management business. It also produces and sells hardwood (eucalyptus), softwood (pine), and fluffed pulp; and paperboard, sackraft, Kraftliner paper, and recycled paper. In addition, the company offers industrial bags, corrugated boxes, and other packaging products. Klabin S.A. was founded in 1899 and is headquartered in São Paulo, Brazil.

About West Fraser Timber

West Fraser Timber Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy. It offers spruce-pine-fir, douglas fir-larch, hem-fir, and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products, as well as particleboards. The company also provides northern bleached softwood Kraft pulp and bleached chemical thermo-mechanical pulp used to produce various paper products, including printing and writing papers, paperboard products, tissue and towel products, and a variety of other paper grades. Further, it offers bioproducts, including bioenergy and biomaterial. Its products are used in home construction, repair and remodeling, papers, tissue, and box materials, and industrial applications. The company sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, the United Kingdom, Europe, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.