Analyzing Sylvamo (NYSE:SLVM) & Louisiana-Pacific (NYSE:LPX)

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Louisiana-Pacific and Sylvamo, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Louisiana-Pacific	3	0	11	0	2.57
Sylvamo	2	2	1	0	1.80

Louisiana-Pacific presently has a consensus target price of $94.00, suggesting a potential upside of 36.59%. Sylvamo has a consensus target price of $46.67, suggesting a potential upside of 34.56%. Given Louisiana-Pacific’s stronger consensus rating and higher possible upside, equities analysts plainly believe Louisiana-Pacific is more favorable than Sylvamo.

Valuation and Earnings

This table compares Louisiana-Pacific and Sylvamo”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	1.78	$146.00 million	$0.79	87.11
Sylvamo	$3.35 billion	0.41	$132.00 million	$1.88	18.45

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

Insider & Institutional Ownership

94.7% of Louisiana-Pacific shares are owned by institutional investors. Comparatively, 91.2% of Sylvamo shares are owned by institutional investors. 0.7% of Louisiana-Pacific shares are owned by insiders. Comparatively, 0.8% of Sylvamo shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Louisiana-Pacific pays an annual dividend of $1.20 per share and has a dividend yield of 1.7%. Sylvamo pays an annual dividend of $1.80 per share and has a dividend yield of 5.2%. Louisiana-Pacific pays out 151.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sylvamo pays out 95.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Louisiana-Pacific has increased its dividend for 7 consecutive years and Sylvamo has increased its dividend for 3 consecutive years. Sylvamo is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Louisiana-Pacific has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, Sylvamo has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Louisiana-Pacific	2.19%	4.67%	3.10%
Sylvamo	2.31%	8.36%	2.90%

Summary

Louisiana-Pacific beats Sylvamo on 10 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 Sylvamo

Sylvamo Corporation produces and markets uncoated freesheet for cutsize, offset paper, and pulp in Latin America, Europe, and North America. The company operates through Europe, Latin America, and North America segments. The Europe segment offers copy, tinted, and colored laser printing paper under REY Adagio and Pro-Design brands; and graphic and high-speed inkjet printing papers under the brand Jetstar; as well as produces uncoated freesheet papers. The Latin America segment focuses on uncoated freesheet paper under Chamex, Chamequinho and Chambril brands, as well as produces HP papers. This segment also operates integrated mills and non-integrated mills. The North America segment offers imaging, commercial printing, and converting papers, as well as uncoated papers under Hammermill, Springhill, Williamsburg, Accent, DRM and Postmark brand names. It distributes its products through a variety of channels, including retail merchants, e-commerce, agents, resellers, and paper distributors. The company was founded in 1898 and is headquartered in Memphis, Tennessee.