Reviewing Resolute Forest Products (RFP) & Kapstone (KS)

Resolute Forest Products (NYSE: RFP) and Kapstone (NYSE:KS) are both basic materials companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Analyst Ratings

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This is a breakdown of recent recommendations for Resolute Forest Products and Kapstone, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Resolute Forest Products 1 3 0 0 1.75
Kapstone 0 8 1 0 2.11

Resolute Forest Products currently has a consensus target price of $9.08, indicating a potential downside of 3.37%. Kapstone has a consensus target price of $29.33, indicating a potential downside of 14.68%. Given Resolute Forest Products’ higher possible upside, equities analysts clearly believe Resolute Forest Products is more favorable than Kapstone.

Institutional & Insider Ownership

88.3% of Resolute Forest Products shares are held by institutional investors. Comparatively, 84.9% of Kapstone shares are held by institutional investors. 1.1% of Resolute Forest Products shares are held by company insiders. Comparatively, 13.1% of Kapstone shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Resolute Forest Products has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500. Comparatively, Kapstone has a beta of 3.02, meaning that its share price is 202% more volatile than the S&P 500.

Valuation & Earnings

This table compares Resolute Forest Products and Kapstone’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Resolute Forest Products $3.51 billion 0.24 -$84.00 million N/A N/A
Kapstone $3.32 billion 1.01 $243.50 million $1.32 26.05

Kapstone has lower revenue, but higher earnings than Resolute Forest Products.

Dividends

Kapstone pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Resolute Forest Products does not pay a dividend. Kapstone pays out 30.3% of its earnings in the form of a dividend.

Profitability

This table compares Resolute Forest Products and Kapstone’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Resolute Forest Products -2.39% 0.74% 0.28%
Kapstone 7.34% 13.31% 3.89%

Summary

Kapstone beats Resolute Forest Products on 10 of the 15 factors compared between the two stocks.

Resolute Forest Products Company Profile

Resolute Forest Products Inc. operates in the forest products industry in the United States, Canada, Mexico, and internationally. The company operates in five segments: Market Pulp, Tissue, Wood Products, Newsprint, and Specialty Papers. The Market Pulp segment offers market, recycled bleached Kraft, and bleached hardwood Kraft pulp used to make a range of consumer products, including tissue, packaging, specialty paper products, diapers, and other absorbent products. The Tissue segment provides tissue products, such as recycled and virgin paper products for the away-from-home and at-home markets; and sells roll products. The Wood Products segment produces construction-grade and spruce-pine-fir lumber products, bed frame components, finger joints, and furring strips, as well as I-joists. The Newsprint segment offers newsprint and sells to newspaper publishers worldwide, as well as to commercial printers in North America for a range of uses comprising inserts and flyers. The Specialty Papers segment offers various specialty papers, including uncoated mechanical papers, such as supercalendered and white papers, as well as coated mechanical papers and uncoated freesheet papers. Its specialty papers are used in books, retail inserts, direct mail, coupons, magazines, catalogs, bags, and other commercial printing applications. This segment sells specialty papers to commercial printers, direct mailers, publishers, catalogers, and retailers. The company also produces electricity at seven cogeneration facilities and seven hydroelectric dams. Resolute Forest Products Inc. is headquartered in Montréal, Canada.

Kapstone Company Profile

KapStone Paper and Packaging Corporation produces and sells a range of containerboards, corrugated products, and specialty paper products in the United States and internationally. The company operates in two segments, Paper and Packaging, and Distribution. The Paper and Packaging segment offers containerboards consisting of linerboard and corrugated medium to manufacture corrugated containers for packaging products; and corrugated products. It also offers specialty paper products, including kraft paper, such as multiwall paper used to produce bags for agricultural products, pet food, baking products, cement and chemicals; specialty products comprising shingle wraps, end caps, roll wraps, and dunnage bags; and lightweight paper. In addition, this segment provides saturating kraft paper under the Durasorb trade name for use in construction, electronics manufacturing, and furniture manufacturing industries; and unbleached folding carton board under the Kraftpak trade name to integrated and independent converters in the folding carton industry. The Distribution segment distributes corrugated and other specialty packaging products consisting of stretch films, void fills, carton sealing tapes, and other specialty tapes. KapStone Paper and Packaging Corporation was founded in 2005 and is headquartered in Northbrook, Illinois.

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