International Paper (NYSE:IP) versus Amcor (NYSE:AMCR) Critical Review

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

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amcor	$23.51 billion	0.82	$177.00 million	$2.36	17.73
International Paper	$23.63 billion	0.71	-$3.52 billion	($6.52)	-4.89

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Amcor	4.71%	15.92%	5.01%
International Paper	-14.20%	-1.09%	-0.44%

Risk and Volatility

Amcor has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, International Paper has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500.

Dividends

Amcor pays an annual dividend of $2.60 per share and has a dividend yield of 6.2%. International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 5.8%. Amcor pays out 110.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. International Paper pays out -28.4% of its earnings in the form of a dividend. Amcor has raised its dividend for 5 consecutive years. Amcor is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amcor	0	6	6	1	2.62
International Paper	1	3	10	0	2.64

Amcor currently has a consensus target price of $49.49, indicating a potential upside of 18.29%. International Paper has a consensus target price of $47.52, indicating a potential upside of 49.14%. Given International Paper’s stronger consensus rating and higher probable upside, analysts clearly believe International Paper is more favorable than Amcor.

Institutional and Insider Ownership

45.1% of Amcor shares are held by institutional investors. Comparatively, 82.0% of International Paper shares are held by institutional investors. 0.3% of Amcor shares are held by company insiders. Comparatively, 0.2% of International Paper shares are held by company 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

Amcor beats International Paper on 11 of the 18 factors compared between the two stocks.

About Amcor

Amcor plc develops, produces, and sells packaging products in Europe, North America, Latin America, Africa, and the Asia Pacific regions. The company operates through two segments, Flexibles and Rigid Packaging. The Flexibles segment provides flexible and film packaging products in the food and beverage, medical and pharmaceutical, fresh produce, snack food, personal care, and other industries. The Rigid Packaging segment offers rigid containers for various beverage and food products, including carbonated soft drinks, water, juices, sports drinks, milk-based beverages, spirits and beer, sauces, dressings, spreads, and personal care items; and plastic caps for various applications. The company sells its products through its direct sales force. Amcor plc was incorporated in 2018 and is headquartered in Zurich, Switzerland.

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.