International Paper (NYSE:IP) versus Crown (NYSE:CCK) Critical Review

International Paper (NYSE:IP) and Crown (NYSE:CCK) are both large-cap materials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Earnings and Valuation

This table compares International Paper and Crown”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Paper	$24.20 billion	0.69	-$3.52 billion	($6.52)	-4.86
Crown	$12.37 billion	0.95	$738.00 million	$6.95	15.61

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

Profitability

This table compares International Paper and Crown’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
International Paper	-14.20%	-1.09%	-0.44%
Crown	5.91%	27.33%	6.52%

Risk & Volatility

International Paper has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, Crown has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Dividends

International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 5.8%. Crown pays an annual dividend of $1.40 per share and has a dividend yield of 1.3%. International Paper pays out -28.4% of its earnings in the form of a dividend. Crown pays out 20.1% 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. Crown has increased its dividend for 4 consecutive years. International Paper is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings and target prices for International Paper and Crown, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Paper	1	3	10	0	2.64
Crown	0	5	12	0	2.71

International Paper currently has a consensus target price of $46.90, indicating a potential upside of 47.86%. Crown has a consensus target price of $127.73, indicating a potential upside of 17.73%. Given International Paper’s higher probable upside, research analysts plainly believe International Paper is more favorable than Crown.

Institutional & Insider Ownership

81.9% of International Paper shares are owned by institutional investors. Comparatively, 90.9% of Crown shares are owned by institutional investors. 0.2% of International Paper shares are owned by company insiders. Comparatively, 0.9% of Crown shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Crown beats International Paper on 12 of the 17 factors compared between the two stocks.

About International Paper

International Paper Company produces and sells renewable fiber-based packaging and pulp products in North America, Latin America, Europe, and North Africa. It operates through two segments, Industrial Packaging and Global Cellulose Fibers. The company offers linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft; and pulp for a range of applications, such as diapers, towel and tissue products, feminine care, incontinence, and other personal care products, as well as specialty pulps for use in textiles, construction materials, paints, coatings, and others. It sells its products directly to end users and converters, as well as through agents, resellers, and distributors. The company was founded in 1898 and is headquartered in Memphis, Tennessee.

About Crown

Crown Holdings, Inc., together with its subsidiaries, engages in the packaging business in the United States and internationally. It operates through Americas Beverage, European Beverage, Asia Pacific, and Transit Packaging segments. The company manufactures and sells recyclable aluminum beverage cans and ends, glass bottles, steel crowns, aluminum caps, non-beverage cans, and aerosol cans and closures. It also provides manual, semi-automatic, and automatic equipment and tools to apply and remove consumables, such as straps and films; protective solutions, including airbags, edge protectors, and honeycomb products; and steel and plastic consumables include steel strap, plastic strap, industrial film, and other related products. The company serves food industries, including pet food, personal care, household, and industrial products. Crown Holdings, Inc. was founded in 1892 and is headquartered in Yardley, Pennsylvania.