WestRock (WRK) and SCA (OTCMKTS:SVCBY) Critical Analysis

SCA (OTCMKTS: SVCBY) and WestRock (NYSE:WRK) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, profitability, valuation, dividends, institutional ownership and earnings.

Volatility & Risk

How to Become a New Pot Stock Millionaire

SCA has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, WestRock has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500.

Profitability

This table compares SCA and WestRock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SCA 242.91% 4.01% 2.12%
WestRock 11.51% 7.45% 3.17%

Valuation & Earnings

This table compares SCA and WestRock’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SCA $1.95 billion 3.62 $576.41 million $0.31 35.81
WestRock $14.86 billion 1.14 $708.20 million $2.62 25.42

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

Analyst Ratings

This is a summary of current recommendations for SCA and WestRock, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SCA 1 0 0 0 1.00
WestRock 0 3 8 1 2.83

WestRock has a consensus target price of $75.10, suggesting a potential upside of 12.75%. Given WestRock’s stronger consensus rating and higher possible upside, analysts clearly believe WestRock is more favorable than SCA.

Dividends

SCA pays an annual dividend of $0.14 per share and has a dividend yield of 1.3%. WestRock pays an annual dividend of $1.72 per share and has a dividend yield of 2.6%. SCA pays out 45.2% of its earnings in the form of a dividend. WestRock pays out 65.6% 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. WestRock has increased its dividend for 2 consecutive years. WestRock is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

88.5% of WestRock shares are held by institutional investors. 2.7% of WestRock shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

WestRock beats SCA on 14 of the 18 factors compared between the two stocks.

SCA Company Profile

Svenska Cellulosa Aktiebolaget SCA (publ), a forest products company, develops, produces, and sells forest, wood, pulp, and paper products worldwide. The company offers timber products for the private forest owners; and supplies wood-based products for the industrial and building materials trade. It also provides kraft pulp and chemical thermomechanical pulp; by-products, such as turpentine and tall oil; and green electricity and district heating under the Celeste, Star, and Cirrus brands. In addition, the company offers kraftliner for corrugated transport packaging; container boards; and publication paper for magazines, catalogues, and commercial printing. Further, it provides renewable energy through wind power projects; and marine and land transportation services, as well as manufactures and sells pellets. The company was founded in 1929 and is headquartered in Sundsvall, Sweden.

WestRock Company Profile

WestRock Company manufactures and sells paper and packaging solutions for the consumer and corrugated markets in North America, South America, Europe, Australia, and Asia. The company operates through three segments: Corrugated Packaging, Consumer Packaging, and Land and Development. The Corrugated Packaging segment produces containerboards, corrugated sheets, corrugated packaging, and preprinted linerboards for consumer and industrial products manufacturers, and corrugated box manufacturers. This segment also provides structural and graphic design, engineering services, and automated packaging machines; resells other products; and offers recycling and waste disposal services. Its corrugated packaging products are used to provide protective packaging for the shipment and distribution of food, paper, health and beauty, other household, consumer, commercial, and industrial products. The Consumer Packaging segment manufactures and sells folding and beverage cartons, displays, dispensing, and interior partitions; paperboards; recycled paperboards; express mail packages for the overnight courier industry; and secondary packages and paperboard packaging for the healthcare market. This segment also manufactures and sells solid fiber and corrugated partitions and die-cut paperboard components; temporary and permanent point-of-purchase displays for the consumer products and retail markets; lithographic laminated packaging products; and plastic packaging products, as well as provides contract packing services. The Land and Development segment engages in real estate development activities, primarily in Charleston, South Carolina. WestRock Company is based in Atlanta, Georgia.

Receive News & Ratings for SCA Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for SCA and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply