Louisiana-Pacific (NYSE:LPX) & Mercer International (NASDAQ:MERC) Head-To-Head Survey

Louisiana-Pacific (NYSE:LPX) and Mercer International (NASDAQ:MERC) are both materials companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Louisiana-Pacific and Mercer International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Louisiana-Pacific	1	1	11	0	2.77
Mercer International	4	2	0	0	1.33

Louisiana-Pacific presently has a consensus target price of $97.80, indicating a potential upside of 26.47%. Mercer International has a consensus target price of $1.20, indicating a potential upside of 77.28%. Given Mercer International’s higher probable upside, analysts clearly believe Mercer International is more favorable than Louisiana-Pacific.

Insider and Institutional Ownership

94.7% of Louisiana-Pacific shares are owned by institutional investors. Comparatively, 85.8% of Mercer International shares are owned by institutional investors. 0.7% of Louisiana-Pacific shares are owned by company insiders. Comparatively, 1.2% of Mercer International shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Louisiana-Pacific has a beta of 1.62, meaning that its stock price is 62% more volatile than the S&P 500. Comparatively, Mercer International has a beta of 0.53, meaning that its stock price is 47% less volatile than the S&P 500.

Earnings & Valuation

This table compares Louisiana-Pacific and Mercer International”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Louisiana-Pacific	$2.71 billion	1.99	$146.00 million	$1.18	65.53
Mercer International	$1.85 billion	0.02	-$497.89 million	($7.89)	-0.09

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

Profitability

This table compares Louisiana-Pacific and Mercer International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Louisiana-Pacific	3.20%	7.03%	4.64%
Mercer International	-28.51%	-136.20%	-13.64%

Dividends

Louisiana-Pacific pays an annual dividend of $1.20 per share and has a dividend yield of 1.6%. Mercer International pays an annual dividend of $0.07 per share and has a dividend yield of 10.3%. Louisiana-Pacific pays out 101.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercer International pays out -0.9% of its earnings in the form of a dividend. Louisiana-Pacific has increased its dividend for 7 consecutive years. Mercer International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Louisiana-Pacific beats Mercer International on 13 of the 17 factors compared between the two stocks.

About Louisiana-Pacific

Louisiana-Pacific Corporation, together with its subsidiaries, provides building solutions primarily for use in new home construction, repair and remodeling, and outdoor structure markets. It operates through Siding, Oriented Strand Board, LP South America, and Other segments. The Siding segment offers LP SmartSide trim and siding products, LP SmartSide ExpertFinish trim and siding products, LP BuilderSeries lap siding products, and LP Outdoor Building Solutions; and engineered wood siding, trim, soffit, and fascia products. Its Oriented Strand Board segment manufactures and distributes oriented strand board structural panel products comprising LP TechShield radiant barriers, LP WeatherLogic air and water barriers, LP Legacy premium sub-flooring products, LP NovaCore, LP FlameBlock fire-rated sheathing products, and LP TopNotch sub-flooring products. The LP South America segment manufactures and distributes oriented strand board structural panel and siding products. This segment distributes and sells related products for the region's transition to wood frame construction. It offers timber and timberlands and other products and services. sells its products primarily to retailers, wholesalers, and homebuilding and industrial businesses in North America and South America, Asia, Australia, and Europe. The company was incorporated in 1972 and is headquartered in Nashville, Tennessee.

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.