Comparing Johnson Controls International (NYSE:JCI) & West Fraser Timber (NYSE:WFG)

West Fraser Timber (NYSE:WFG) and Johnson Controls International (NYSE:JCI) are both construction companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

40.2% of West Fraser Timber shares are held by institutional investors. Comparatively, 90.1% of Johnson Controls International shares are held by institutional investors. 1.8% of West Fraser Timber shares are held by company insiders. Comparatively, 0.5% of Johnson Controls International shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent recommendations for West Fraser Timber and Johnson Controls International, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Fraser Timber	0	1	4	0	2.80
Johnson Controls International	0	10	9	0	2.47

West Fraser Timber presently has a consensus target price of $100.00, suggesting a potential upside of 35.97%. Johnson Controls International has a consensus target price of $105.1667, suggesting a potential downside of 0.54%. Given West Fraser Timber’s stronger consensus rating and higher probable upside, equities analysts plainly believe West Fraser Timber is more favorable than Johnson Controls International.

Profitability

This table compares West Fraser Timber and Johnson Controls International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Fraser Timber	-2.18%	-0.85%	-0.66%
Johnson Controls International	9.53%	14.71%	5.91%

Risk & Volatility

West Fraser Timber has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, Johnson Controls International has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500.

Dividends

West Fraser Timber pays an annual dividend of $1.28 per share and has a dividend yield of 1.7%. Johnson Controls International pays an annual dividend of $1.48 per share and has a dividend yield of 1.4%. West Fraser Timber pays out -73.1% of its earnings in the form of a dividend. Johnson Controls International pays out 43.9% 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. West Fraser Timber has raised its dividend for 3 consecutive years and Johnson Controls International has raised its dividend for 4 consecutive years. West Fraser Timber is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares West Fraser Timber and Johnson Controls International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Fraser Timber	$6.17 billion	0.91	-$5.00 million	($1.75)	-42.03
Johnson Controls International	$22.95 billion	3.01	$1.71 billion	$3.37	31.38

Johnson Controls International has higher revenue and earnings than West Fraser Timber. West Fraser Timber is trading at a lower price-to-earnings ratio than Johnson Controls International, indicating that it is currently the more affordable of the two stocks.

Summary

Johnson Controls International beats West Fraser Timber on 12 of the 17 factors compared between the two stocks.

About West Fraser Timber

West Fraser Timber Co. Ltd., a diversified wood products company, engages in manufacturing, selling, marketing, and distributing lumber, engineered wood products, pulp, newsprint, wood chips, and other residuals and renewable energy. It offers spruce-pine-fir, douglas fir-larch, hem-fir, and southern yellow pine lumber, treated wood products, medium density fiberboard panels and plywood, oriented strand board, and laminated veneer lumber wood products, as well as particleboards. The company also provides northern bleached softwood Kraft pulp and bleached chemical thermo-mechanical pulp used to produce various paper products, including printing and writing papers, paperboard products, tissue and towel products, and a variety of other paper grades. Further, it offers bioproducts, including bioenergy and biomaterial. Its products are used in home construction, repair and remodeling, papers, tissue, and box materials, and industrial applications. The company sells its products to major retail chains, contractor supply yards, and wholesalers, as well as industrial customers for further processing or as components for other products in Canada, the United States, the United Kingdom, Europe, and internationally. West Fraser Timber Co. Ltd. was founded in 1955 and is headquartered in Vancouver, Canada.

About Johnson Controls International

Johnson Controls International plc, together with its subsidiaries, engages in engineering, manufacturing, commissioning, and retrofitting building products and systems in the United States, Europe, the Asia Pacific, and internationally. It operates in four segments: Building Solutions North America, Building Solutions EMEA/LA, Building Solutions Asia Pacific, and Global Products. The company designs, sells, installs, and services heating, ventilating, air conditioning, controls, building management, refrigeration, integrated electronic security, integrated fire detection and suppression systems, and fire protection and security products for commercial, industrial, retail, small business, institutional, and governmental customers. It also provides energy efficiency solutions and technical services, including inspection, scheduled maintenance, and repair and replacement of mechanical and control systems, as well as data-driven smart building solutions to non-residential building and industrial applications. In addition, the company offers control software and software services for residential and commercial applications. Johnson Controls International plc was incorporated in 1885 and is headquartered in Cork, Ireland.