Hexagon Composites ASA (OTCMKTS:HXGCF) vs. International Paper (NYSE:IP) Critical Review

International Paper (NYSE:IP) and Hexagon Composites ASA (OTCMKTS:HXGCF) are both materials companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for International Paper and Hexagon Composites ASA, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
International Paper	1	4	9	0	2.57
Hexagon Composites ASA	0	0	1	0	3.00

International Paper presently has a consensus price target of $48.75, suggesting a potential upside of 18.29%. Given International Paper’s higher possible upside, analysts clearly believe International Paper is more favorable than Hexagon Composites ASA.

Insider and Institutional Ownership

82.0% of International Paper shares are held by institutional investors. Comparatively, 16.8% of Hexagon Composites ASA shares are held by institutional investors. 0.2% of International Paper shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares International Paper and Hexagon Composites ASA”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
International Paper	$23.63 billion	0.92	-$3.52 billion	($6.52)	-6.32
Hexagon Composites ASA	N/A	N/A	N/A	$0.98	1.49

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
International Paper	-14.20%	-1.09%	-0.44%
Hexagon Composites ASA	N/A	N/A	N/A

Dividends

International Paper pays an annual dividend of $1.85 per share and has a dividend yield of 4.5%. Hexagon Composites ASA pays an annual dividend of $0.25 per share and has a dividend yield of 17.0%. International Paper pays out -28.4% of its earnings in the form of a dividend. Hexagon Composites ASA pays out 25.3% 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.

Summary

Hexagon Composites ASA beats International Paper on 7 of the 13 factors compared between the two stocks.

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.

About Hexagon Composites ASA

Hexagon Composites ASA, together with its subsidiaries, engages in the manufacture and sale of composite pressure cylinders and fuel systems for alternative fuels worldwide. The company operates through Hexagon Agility, Hexagon Ragasco, and Hexagon Digital Wave segments. The Hexagon Agility segment provides clean fuel solutions for commercial vehicles, passenger vehicles, and gaseous energy transportation; and gas distribution solutions. The Hexagon Ragasco segment manufacturers composite liquefied petroleum gas (LPG) cylinders for leisure, household, and industrial applications. The Hexagon Digital Wave segment offers cylinder testing and monitoring technology solutions that reduce cylinder and system down-time and inspection costs while improving inspection accuracy. Hexagon Composites ASA was founded in 1985 and is headquartered in Ålesund, Norway.