Mercer International (NASDAQ:MERC – Get Free Report) and Sappi (OTCMKTS:SPPJY – Get Free Report) are both small-cap materials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.
Earnings & Valuation
This table compares Mercer International and Sappi”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Mercer International | $1.86 billion | 0.01 | -$497.89 million | ($7.40) | -0.04 |
| Sappi | $5.42 billion | 0.09 | -$177.00 million | ($1.36) | -0.58 |
Sappi has higher revenue and earnings than Mercer International. Sappi is trading at a lower price-to-earnings ratio than Mercer International, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current ratings and price targets for Mercer International and Sappi, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Mercer International | 5 | 1 | 0 | 0 | 1.17 |
| Sappi | 0 | 1 | 0 | 0 | 2.00 |
Mercer International currently has a consensus target price of $0.85, suggesting a potential upside of 226.92%. Given Mercer International’s higher possible upside, research analysts clearly believe Mercer International is more favorable than Sappi.
Profitability
This table compares Mercer International and Sappi’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Mercer International | -26.95% | -352.57% | -14.31% |
| Sappi | -15.44% | -6.41% | -2.30% |
Insider & Institutional Ownership
85.8% of Mercer International shares are held by institutional investors. 1.2% of Mercer International shares are held by insiders. Comparatively, 0.7% of Sappi shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Volatility and Risk
Mercer International has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Sappi has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500.
Summary
Sappi beats Mercer International on 8 of the 13 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 Sappi
Sappi Limited, together with its subsidiaries, engages in the provision of materials made from woodfiber-based renewable resources in Europe, North America, and South Africa. The company manufacture and sells dissolving pulp, and wood and paper pulp; graphic papers, coated and uncoated papers, and casting and release papers; and packaging and specialty papers, including packaging and specialty papers, including flexible packaging papers, label papers, functional paper packaging products, containerboards, paperboards, silicone base papers, and dye sublimation papers. It also provides biomaterials, such as valida, lignin, furfural, and sweeteners, as well as forestry products; and engages in the treasury and insurance business. The company was founded in 1936 and is headquartered in Johannesburg, South Africa.
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