Mercer International (NASDAQ:MERC) and Rayonier Advanced Materials (NYSE:RYAM) are both small-cap basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, profitability, institutional ownership, risk and valuation.
Volatility & Risk
Mercer International has a beta of 1.93, meaning that its stock price is 93% more volatile than the S&P 500. Comparatively, Rayonier Advanced Materials has a beta of 3.88, meaning that its stock price is 288% more volatile than the S&P 500.
This table compares Mercer International and Rayonier Advanced Materials’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Mercer International||$1.62 billion||0.56||-$9.64 million||($0.08)||-171.13|
|Rayonier Advanced Materials||$1.78 billion||0.31||-$22.45 million||($2.16)||-4.06|
Mercer International has higher earnings, but lower revenue than Rayonier Advanced Materials. Mercer International is trading at a lower price-to-earnings ratio than Rayonier Advanced Materials, indicating that it is currently the more affordable of the two stocks.
This table compares Mercer International and Rayonier Advanced Materials’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Rayonier Advanced Materials||1.24%||-10.15%||-2.35%|
This is a breakdown of current ratings and recommmendations for Mercer International and Rayonier Advanced Materials, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Rayonier Advanced Materials||0||0||3||0||3.00|
Mercer International presently has a consensus target price of $13.90, indicating a potential upside of 1.53%. Rayonier Advanced Materials has a consensus target price of $4.55, indicating a potential downside of 48.12%. Given Mercer International’s higher possible upside, equities research analysts clearly believe Mercer International is more favorable than Rayonier Advanced Materials.
Institutional & Insider Ownership
74.2% of Mercer International shares are held by institutional investors. Comparatively, 66.0% of Rayonier Advanced Materials shares are held by institutional investors. 4.1% of Mercer International shares are held by company insiders. Comparatively, 3.1% of Rayonier Advanced Materials shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
About Mercer International
Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) pulp in Europe, the United States, Asia, and internationally. The company operates in two segments, Pulp and Wood Products. It also generates and sells green energy produced from biomass cogeneration power plant to third party utilities. In addition, the company manufactures, distributes, and sells lumber and other wood residuals. Further, it produces NBSK pulp primarily from wood chips and pulp logs; carbon neutral or green energy using carbon-neutral bio-fuels, such as black liquor and wood waste; and tall oil for use as a chemical additive and green energy source. The company sells its pulp to tissue, specialty paper, and printing and writing paper 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 Rayonier Advanced Materials
Rayonier Advanced Materials Inc. manufactures and sells cellulose specialty products in the United States, China, Japan, Europe, Latin America, other Asian countries, Canada, and internationally. The company operates through High Purity Cellulose, Forest Products, Paperboard, and Pulp & Newsprint segments. Its products include cellulose specialties, which are natural polymers that are used as raw materials to manufacture a range of consumer-oriented products, such as cigarette filters, liquid crystal displays, impact-resistant plastics, thickeners for food products, pharmaceuticals, cosmetics, high-tenacity rayon yarn for tires and industrial hoses, food casings, paints, and lacquers. The company also offers commodity products, such as commodity viscose used in woven applications, including rayon textiles for clothing and other fabrics, as well as in non-woven applications comprising baby wipes, cosmetic and personal wipes, industrial wipes, and mattress ticking; and absorbent materials consisting of fluff fibers that are used as an absorbent medium in disposable baby diapers, feminine hygiene products, incontinence pads, convalescent bed pads, industrial towels and wipes, and non-woven fabrics. In addition, it provides finished dimensional lumber for use in the construction of residential and multi-family homes, light industrial, and commercial facilities, as well as in the home repair and remodel markets. Further, the company offers paperboards for packaging, printing documents, brochures, promotional materials, paperback books or catalog covers, file folders, tags, and tickets; high-yield pulps to produce paperboard and packaging products, printing and writing papers, and various other paper products; and newsprint, a paper grade used to print newspapers, advertising materials, and other publications. Rayonier Advanced Materials Inc. was founded in 1926 and is headquartered in Jacksonville, Florida.
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