Mercer International (NASDAQ:MERC – Get Free Report) and Suzano (NYSE:SUZ – Get Free Report) are both basic materials companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, risk, institutional ownership, dividends and valuation.
Volatility & Risk
Mercer International has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500. Comparatively, Suzano has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500.
Valuation & Earnings
This table compares Mercer International and Suzano”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Mercer International | $2.04 billion | 0.09 | -$85.14 million | ($1.63) | -1.67 |
| Suzano | $8.79 billion | 1.39 | -$1.31 billion | $1.13 | 8.18 |
Mercer International has higher earnings, but lower revenue than Suzano. Mercer International is trading at a lower price-to-earnings ratio than Suzano, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
85.8% of Mercer International shares are owned by institutional investors. Comparatively, 2.6% of Suzano shares are owned by institutional investors. 1.0% of Mercer International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Dividends
Mercer International pays an annual dividend of $0.30 per share and has a dividend yield of 11.0%. Suzano pays an annual dividend of $0.26 per share and has a dividend yield of 2.8%. Mercer International pays out -18.4% of its earnings in the form of a dividend. Suzano pays out 23.0% 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. Mercer International is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Ratings
This is a summary of current ratings for Mercer International and Suzano, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Mercer International | 0 | 4 | 0 | 0 | 2.00 |
| Suzano | 0 | 1 | 1 | 1 | 3.00 |
Mercer International currently has a consensus price target of $4.25, indicating a potential upside of 55.68%. Given Mercer International’s higher possible upside, equities analysts clearly believe Mercer International is more favorable than Suzano.
Profitability
This table compares Mercer International and Suzano’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Mercer International | -5.60% | -23.88% | -4.61% |
| Suzano | 15.54% | 20.08% | 4.93% |
Summary
Suzano beats Mercer International on 10 of the 17 factors compared between the two stocks.
About Mercer International
Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) and northern bleached hardwood kraft (NBHK) pulp worldwide. The company operates through two segments, Pulp and Solid Wood. It manufactures, sells, and distributes pulp, electricity, and chemicals through pulp mills. The company also manufactures, distributes, and sells lumber, cross-laminated timber, finger joint lumber, glue-laminated timber, wood pallets, electricity, biofuels, and wood residuals. In addition, it generates and sells green energy produced from biomass cogeneration power plant to third party. Further, it produces and sells NBSK pulp manufactured from softwood; green energy using carbon-neutral biofuels, such as black liquor and wood waste; tall oil from black liquor for use as a chemical additive and green energy source; bio extractives and biomaterials, including lignin, turpentine, cellulose filaments, and sandalwood oil; and biofuels; as well as provides transportation and logistics services. The company sells its pulp to pulp markets, integrated paper and paperboard manufacturers; and lumber products to distributors, construction firms, secondary manufacturers, retail yards, and home centers. Mercer International Inc. was founded in 1968 and is headquartered in Vancouver, Canada.
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.
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