Avery Dennison (NYSE:AVY) vs. International Paper (NYSE:IP) Head-To-Head Contrast

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Avery Dennison	7.62%	34.60%	8.76%
International Paper	-14.20%	-1.09%	-0.44%

Earnings & Valuation

This table compares Avery Dennison and International Paper”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avery Dennison	$9.25 billion	1.46	$688.00 million	$9.13	19.57
International Paper	$23.63 billion	0.91	-$3.52 billion	($6.52)	-6.25

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

Institutional and Insider Ownership

94.2% of Avery Dennison shares are held by institutional investors. Comparatively, 82.0% of International Paper shares are held by institutional investors. 0.8% of Avery Dennison shares are held by insiders. Comparatively, 0.2% of International Paper shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Avery Dennison pays an annual dividend of $4.00 per share and has a dividend yield of 2.2%. International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 4.5%. Avery Dennison pays out 43.8% of its earnings in the form of a dividend. International Paper pays out -28.4% 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. Avery Dennison has increased its dividend for 15 consecutive years. International Paper is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations for Avery Dennison and International Paper, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avery Dennison	0	2	7	0	2.78
International Paper	1	4	9	0	2.57

Avery Dennison currently has a consensus target price of $201.22, indicating a potential upside of 12.63%. International Paper has a consensus target price of $48.75, indicating a potential upside of 19.69%. Given International Paper’s higher possible upside, analysts plainly believe International Paper is more favorable than Avery Dennison.

Volatility & Risk

Avery Dennison has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, International Paper has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Summary

Avery Dennison beats International Paper on 11 of the 17 factors compared between the two stocks.

About Avery Dennison

Avery Dennison Corporation operates as a materials science and digital identification solutions company in the United States, Europe, the Middle East, North Africa, Asia, Latin, America, and internationally. It provides pressure-sensitive materials comprising papers, plastic films, metal foils, and fabrics; performance tapes products, including tapes for wire harnessing, as well as cable wrapping for automotive, electrical, and general industrial applications; mechanical fasteners, which are precision-extruded and injection-molded plastic devices used in various automotive, general industrial, and retail applications; and other pressure-sensitive adhesive-based materials and converted products under the Fasson, JAC, Yongle, and Avery Dennison brands. The company also offers graphics and reflective products for the architectural, commercial sign, digital printing, and other related market segments; durable cast and reflective films to the construction, automotive, and fleet transportation market segments; reflective films for traffic and safety applications; and pressure-sensitive vinyl and specialty materials designed for digital imaging, screen printing, and sign cutting applications under the Avery Dennison and Mactac brand names. In addition, it provides branding solutions include brand embellishments, graphic tickets, tags, and labels, and sustainable packaging; and information solutions include item-level RFID, visibility and loss prevention, price ticketing and marking, productivity and media solutions, and brand protection and security solutions, as well as care, content, and country of origin compliance solutions. It serves home and personal care, apparel, e-commerce, logistics, food and grocery, pharmaceuticals, and automotive industries. The company was formerly known as Avery International Corporation and changed its name to Avery Dennison Corporation in 1990. Avery Dennison Corporation was founded in 1935 and is headquartered in Mentor, Ohio.

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.