Financial Analysis: Smurfit Westrock (NYSE:SW) and Sylvamo (NYSE:SLVM)

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

Insider & Institutional Ownership

83.4% of Smurfit Westrock shares are owned by institutional investors. Comparatively, 91.2% of Sylvamo shares are owned by institutional investors. 0.5% of Smurfit Westrock shares are owned by insiders. Comparatively, 0.7% of Sylvamo shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Smurfit Westrock pays an annual dividend of $1.72 per share and has a dividend yield of 5.0%. Sylvamo pays an annual dividend of $1.80 per share and has a dividend yield of 4.0%. Smurfit Westrock pays out 120.3% 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 41.2% of its earnings in the form of a dividend. Sylvamo has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for Smurfit Westrock and Sylvamo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smurfit Westrock	0	1	10	1	3.00
Sylvamo	2	2	0	0	1.50

Smurfit Westrock currently has a consensus target price of $55.30, suggesting a potential upside of 61.66%. Sylvamo has a consensus target price of $56.50, suggesting a potential upside of 25.78%. Given Smurfit Westrock’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Smurfit Westrock is more favorable than Sylvamo.

Risk and Volatility

Smurfit Westrock has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, Sylvamo has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Smurfit Westrock	2.40%	6.21%	2.49%
Sylvamo	5.25%	19.72%	6.87%

Earnings & Valuation

This table compares Smurfit Westrock and Sylvamo”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smurfit Westrock	$31.14 billion	0.57	$319.00 million	$1.43	23.92
Sylvamo	$3.77 billion	0.47	$302.00 million	$4.37	10.28

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

Summary

Smurfit Westrock beats Sylvamo on 10 of the 18 factors compared between the two stocks.

About Smurfit Westrock

Smurfit Westrock Plc, together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products in Ireland and internationally. The company produces containerboard that it converts into corrugated containers or sells to third parties, as well as produces other types of paper, such as consumer packaging board, sack paper, graphic paper, solid board and graphic board, and other paper-based packaging products, such as consumer packaging, solid board packaging, paper sacks, and other packaging products, including bag-in-box. It also produces linerboard and corrugated medium, paperboard, and non-packaging grades of paper, as well as converted products, such as folding cartons and corrugated boxes, and other products; recycled paper-based packaging products; and packaging machinery. The company primarily serves food and beverage, e-commerce, retail, consumer goods, industrial, and foodservice markets. Smurfit Westrock Plc was founded in 1934 and is headquartered in Dublin, Ireland.

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.