Reviewing Sylvamo (NYSE:SLVM) & Suzano (NYSE:SUZ)

Sylvamo (NYSE:SLVM) and Suzano (NYSE:SUZ) are both materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

91.2% of Sylvamo shares are held by institutional investors. Comparatively, 2.5% of Suzano shares are held by institutional investors. 0.8% of Sylvamo shares are held by company 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 Sylvamo and Suzano”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sylvamo	$3.35 billion	0.46	$132.00 million	($4.51)	-8.55
Suzano	$8.97 billion	1.33	$2.40 billion	$1.30	7.43

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

Profitability

This table compares Sylvamo and Suzano’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sylvamo	-5.81%	8.36%	2.66%
Suzano	15.98%	14.29%	4.11%

Analyst Ratings

This is a summary of recent ratings and price targets for Sylvamo and Suzano, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sylvamo	1	3	2	0	2.17
Suzano	0	2	2	0	2.50

Sylvamo presently has a consensus target price of $43.25, suggesting a potential upside of 12.13%. Suzano has a consensus target price of $13.20, suggesting a potential upside of 36.72%. Given Suzano’s stronger consensus rating and higher possible upside, analysts clearly believe Suzano is more favorable than Sylvamo.

Volatility and Risk

Sylvamo has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Suzano has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Dividends

Sylvamo pays an annual dividend of $1.80 per share and has a dividend yield of 4.7%. Suzano pays an annual dividend of $0.18 per share and has a dividend yield of 1.9%. Sylvamo pays out -39.9% of its earnings in the form of a dividend. Suzano pays out 13.8% 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. Sylvamo has raised its dividend for 3 consecutive years. Sylvamo is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Suzano beats Sylvamo on 10 of the 16 factors compared between the two stocks.

About Sylvamo

Sylvamo Corporation is a global paper company that produces uncoated freesheet paper for a range of uses, including office and home printing, commercial printing, and publishing. Its products include copy and office papers, as well as specialty papers and market pulp. The company serves customers in North America, Latin America, and Europe. Its operations include manufacturing facilities in the United States, Brazil, and Europe, with products sold under various regional and consumer paper brands.

About Suzano

Suzano (NYSE: SUZ) is a Brazilian company that produces eucalyptus pulp and paper products. Its portfolio includes pulp used in tissue, printing and writing paper, and packaging, as well as finished paper products such as tissue and consumer goods. The company also develops products and solutions made from renewable wood-based materials. Tracing its origins to 1924, Suzano helped pioneer the use of eucalyptus as a source of pulp. In 2019, it combined with pulp producer Fibria, expanding its scale and production operations.