Suzano (NYSE:SUZ – Get Free Report) and Sappi (OTCMKTS:SPPJY – Get Free Report) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.
Volatility and Risk
Suzano has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, Sappi has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for Suzano and Sappi, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Suzano | 0 | 1 | 1 | 1 | 3.00 |
| Sappi | 1 | 0 | 0 | 0 | 1.00 |
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Suzano | $8.79 billion | 1.42 | -$1.31 billion | $1.13 | 8.37 |
| Sappi | $5.46 billion | 0.15 | $33.00 million | $0.17 | 8.44 |
Sappi has lower revenue, but higher earnings than Suzano. Suzano is trading at a lower price-to-earnings ratio than Sappi, indicating that it is currently the more affordable of the two stocks.
Dividends
Suzano pays an annual dividend of $0.26 per share and has a dividend yield of 2.7%. Sappi pays an annual dividend of $0.10 per share and has a dividend yield of 7.0%. Suzano pays out 23.0% of its earnings in the form of a dividend. Sappi pays out 58.8% 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.
Insider & Institutional Ownership
2.6% of Suzano shares are owned by institutional investors. 0.7% of Sappi shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Suzano and Sappi’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Suzano | 15.54% | 20.08% | 4.93% |
| Sappi | 1.75% | 6.12% | 2.53% |
Summary
Suzano beats Sappi on 12 of the 16 factors compared between the two stocks.
About Suzano
Suzano S.A. produces and sells eucalyptus pulp and paper products in Brazil and internationally. It operates through Pulp and Paper segments. The company offers coated and uncoated printing and writing papers, paperboards, tissue papers, and market and fluff pulps; and lignin. It also engages in the research, development, and production of biofuel; operation of port terminals; power generation and distribution business; commercialization of equipment and parts; industrialization, commercialization, and exporting of pulp and standing wood; road freight transport; biotechnology research and development; and commercialization of paper and computer materials. In addition, the company is involved in the business office, production packaging, and financial fundraising activities; research, development, production, commercialization, and distribution of wood-based textile fibers, yarns, and filaments produced from cellulose and microfibrillated cellulose; and research and development of wood raw materials for the textile industry. Suzano S.A. was formerly known as Suzano Papel e Celulose S.A. and changed its name to Suzano S.A. in April 2019. The company was founded in 1924 and is headquartered in Salvador, Brazil.
About Sappi
Sappi Limited, together with its subsidiaries, engages in the provision of materials made from woodfiber-based renewable resources in Europe, North America, and South Africa. The company manufacture and sells dissolving pulp, and wood and paper pulp; graphic papers, coated and uncoated papers, and casting and release papers; and packaging and specialty papers, including packaging and specialty papers, including flexible packaging papers, label papers, functional paper packaging products, containerboards, paperboards, silicone base papers, and dye sublimation papers. It also provides biomaterials, such as valida, lignin, furfural, and sweeteners, as well as forestry products; and engages in the treasury and insurance business. The company was founded in 1936 and is headquartered in Johannesburg, South Africa.
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