Klabin (OTCMKTS:KLBAY) versus Smurfit Westrock (NYSE:SW) Critical Review

Klabin (OTCMKTS:KLBAY) and Smurfit Westrock (NYSE:SW) are both large-cap basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Klabin and Smurfit Westrock, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Klabin	0	1	0	1	3.00
Smurfit Westrock	0	1	10	1	3.00

Smurfit Westrock has a consensus price target of $56.90, indicating a potential upside of 58.89%. Given Smurfit Westrock’s higher possible upside, analysts clearly believe Smurfit Westrock is more favorable than Klabin.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Klabin	7.93%	15.34%	2.87%
Smurfit Westrock	2.40%	6.21%	2.49%

Institutional and Insider Ownership

83.4% of Smurfit Westrock shares are owned by institutional investors. 0.5% of Smurfit Westrock shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Klabin pays an annual dividend of $0.37 per share and has a dividend yield of 5.4%. Smurfit Westrock pays an annual dividend of $1.72 per share and has a dividend yield of 4.8%. Klabin pays out 74.0% of its earnings in the form of a dividend. Smurfit Westrock pays out 120.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Klabin is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Klabin has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Smurfit Westrock has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500.

Valuation & Earnings

This table compares Klabin and Smurfit Westrock”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Klabin	$3.64 billion	5.79	$339.47 million	$0.50	13.65
Smurfit Westrock	$31.14 billion	0.60	$319.00 million	$1.43	25.04

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

Summary

Smurfit Westrock beats Klabin on 8 of the 15 factors compared between the two stocks.

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.

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.