Critical Survey: Suzano (NYSE:SUZ) versus Klabin (OTCMKTS:KLBAY)

Suzano (NYSE:SUZ) and Klabin (OTCMKTS:KLBAY) are both large-cap materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.

Profitability

This table compares Suzano and Klabin’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Suzano	17.20%	14.92%	4.18%
Klabin	0.80%	1.11%	0.27%

Analyst Recommendations

This is a summary of recent recommendations and price targets for Suzano and Klabin, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Suzano	1	1	2	0	2.25
Klabin	0	2	0	0	2.00

Suzano presently has a consensus target price of $13.20, indicating a potential upside of 40.20%. Given Suzano’s stronger consensus rating and higher probable upside, analysts clearly believe Suzano is more favorable than Klabin.

Insider and Institutional Ownership

2.5% of Suzano shares are held by institutional investors. 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.

Earnings and Valuation

This table compares Suzano and Klabin”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Suzano	$8.97 billion	1.30	$2.40 billion	$1.26	7.47
Klabin	$3.71 billion	5.54	$251.30 million	$0.14	47.00

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

Dividends

Suzano pays an annual dividend of $0.18 per share and has a dividend yield of 1.9%. Klabin pays an annual dividend of $0.18 per share and has a dividend yield of 2.7%. Suzano pays out 14.3% of its earnings in the form of a dividend. Klabin pays out 128.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Suzano has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Klabin has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.

Summary

Suzano beats Klabin on 11 of the 15 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 Klabin

Klabin S.A., together with its subsidiaries, produces and exports packaging paper and sustainable paper packaging solutions in Brazil and internationally. The company engages in the planting of pine and eucalyptus; and forestry management business. It also produces and sells hardwood (eucalyptus), softwood (pine), and fluffed pulp; and paperboard, sackraft, Kraftliner paper, and recycled paper. In addition, the company offers industrial bags, corrugated boxes, and other packaging products. Klabin S.A. was founded in 1899 and is headquartered in São Paulo, Brazil.