Critical Survey: West Fraser Timber (NYSE:WFG) vs. Clearwater Paper (NYSE:CLW)

West Fraser Timber (NYSE:WFG) and Clearwater Paper (NYSE:CLW) are both materials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, dividends, institutional ownership, analyst recommendations, profitability and earnings.

Risk and Volatility

West Fraser Timber has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.Comparatively, Clearwater Paper has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500.

Institutional and Insider Ownership

40.2% of West Fraser Timber shares are owned by institutional investors. Comparatively, 90.0% of Clearwater Paper shares are owned by institutional investors. 1.8% of West Fraser Timber shares are owned by company insiders. Comparatively, 2.4% of Clearwater Paper shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares West Fraser Timber and Clearwater Paper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
West Fraser Timber	-22.98%	-10.84%	-8.19%
Clearwater Paper	-3.24%	-7.95%	-4.06%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for West Fraser Timber and Clearwater Paper, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
West Fraser Timber	1	3	4	0	2.38
Clearwater Paper	1	5	2	0	2.12

West Fraser Timber currently has a consensus price target of $83.20, suggesting a potential upside of 19.85%. Clearwater Paper has a consensus price target of $18.50, suggesting a potential downside of 14.71%. Given West Fraser Timber’s stronger consensus rating and higher probable upside, research analysts plainly believe West Fraser Timber is more favorable than Clearwater Paper.

Valuation and Earnings

This table compares West Fraser Timber and Clearwater Paper”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
West Fraser Timber	$5.24 billion	1.04	-$937.00 million	($15.44)	-4.50
Clearwater Paper	$1.56 billion	0.22	-$18.60 million	($3.04)	-7.13

Clearwater Paper has lower revenue, but higher earnings than West Fraser Timber. Clearwater Paper is trading at a lower price-to-earnings ratio than West Fraser Timber, indicating that it is currently the more affordable of 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 Clearwater Paper

Clearwater Paper Corporation manufactures and supplies bleached paperboards, and consumer and parent roll tissues in the United States and internationally. It operates through Pulp and Paperboard, and Consumer Products segments. The Pulp and Paperboard segment manufactures and markets bleached paperboard; Solid Bleached Sulfate paperboard that is used to produce folding cartons, liquid packaging, cups and plates, blister and carded packaging, and top sheet and commercial printing items; and hardwood and softwood pulp, as well as offers services that include custom sheeting, slitting, and cutting. It sells its products to carton converters, folding carton converters, merchants, and commercial printers. The Consumer Products segment provides a line of at-home tissue products, including bath tissues, paper towels, facial tissues, and napkins; recycled fiber value grade products; and away-from-home tissues. This segment sells its products to retailers, including grocery, club, mass merchants, and discount stores. The company was incorporated in 2005 and is based in Spokane, Washington.