Head-To-Head Contrast: Smurfit Westrock (NYSE:SW) versus Mercer International (NASDAQ:MERC)

Mercer International (NASDAQ:MERC) and Smurfit Westrock (NYSE:SW) are both basic materials companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, earnings and profitability.

Risk & Volatility

Mercer International has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Smurfit Westrock has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500.

Earnings and Valuation

This table compares Mercer International and Smurfit Westrock”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercer International	$2.04 billion	0.09	-$85.14 million	($1.63)	-1.61
Smurfit Westrock	$21.11 billion	1.00	$319.00 million	$0.66	61.40

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

Institutional and Insider Ownership

85.8% of Mercer International shares are held by institutional investors. Comparatively, 83.4% of Smurfit Westrock shares are held by institutional investors. 1.0% of Mercer International shares are held by insiders. Comparatively, 0.5% of Smurfit Westrock shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Mercer International and Smurfit Westrock, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercer International	1	4	0	0	1.80
Smurfit Westrock	0	1	10	1	3.00

Mercer International presently has a consensus price target of $4.25, suggesting a potential upside of 62.21%. Smurfit Westrock has a consensus price target of $57.80, suggesting a potential upside of 42.62%. Given Mercer International’s higher probable upside, equities research analysts clearly believe Mercer International is more favorable than Smurfit Westrock.

Dividends

Mercer International pays an annual dividend of $0.30 per share and has a dividend yield of 11.5%. Smurfit Westrock pays an annual dividend of $1.72 per share and has a dividend yield of 4.2%. Mercer International pays out -18.4% of its earnings in the form of a dividend. Smurfit Westrock pays out 260.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercer International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Mercer International and Smurfit Westrock’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercer International	-5.60%	-23.88%	-4.61%
Smurfit Westrock	1.14%	5.90%	2.36%

Summary

Smurfit Westrock beats Mercer International on 12 of the 17 factors compared between the two stocks.

About Mercer International

Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) and northern bleached hardwood kraft (NBHK) pulp worldwide. The company operates through two segments, Pulp and Solid Wood. It manufactures, sells, and distributes pulp, electricity, and chemicals through pulp mills. The company also manufactures, distributes, and sells lumber, cross-laminated timber, finger joint lumber, glue-laminated timber, wood pallets, electricity, biofuels, and wood residuals. In addition, it generates and sells green energy produced from biomass cogeneration power plant to third party. Further, it produces and sells NBSK pulp manufactured from softwood; green energy using carbon-neutral biofuels, such as black liquor and wood waste; tall oil from black liquor for use as a chemical additive and green energy source; bio extractives and biomaterials, including lignin, turpentine, cellulose filaments, and sandalwood oil; and biofuels; as well as provides transportation and logistics services. The company sells its pulp to pulp markets, integrated paper and paperboard manufacturers; and lumber products to distributors, construction firms, secondary manufacturers, retail yards, and home centers. Mercer International Inc. was founded in 1968 and is headquartered in Vancouver, Canada.

About Smurfit Westrock

Smurfit Westrock Plc, together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products in Ireland and internationally. The company produces containerboard that it converts into corrugated containers or sells to third parties, as well as produces other types of paper, such as consumer packaging board, sack paper, graphic paper, solid board and graphic board, and other paper-based packaging products, such as consumer packaging, solid board packaging, paper sacks, and other packaging products, including bag-in-box. It also produces linerboard and corrugated medium, paperboard, and non-packaging grades of paper, as well as converted products, such as folding cartons and corrugated boxes, and other products; recycled paper-based packaging products; and packaging machinery. The company primarily serves food and beverage, e-commerce, retail, consumer goods, industrial, and foodservice markets. Smurfit Westrock Plc was founded in 1934 and is headquartered in Dublin, Ireland.