Neenah (NP) and Kapstone (KS) Head-To-Head Survey

Neenah (NYSE: NP) and Kapstone (NYSE:KS) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, valuation, profitability, dividends, earnings, institutional ownership and risk.

Risk and Volatility

Neenah has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500. Comparatively, Kapstone has a beta of 3.02, suggesting that its stock price is 202% more volatile than the S&P 500.

Profitability

This table compares Neenah and Kapstone’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Neenah 7.86% 18.73% 8.52%
Kapstone 8.07% 15.10% 4.70%

Institutional & Insider Ownership

90.4% of Neenah shares are owned by institutional investors. Comparatively, 82.9% of Kapstone shares are owned by institutional investors. 1.5% of Neenah shares are owned by insiders. Comparatively, 13.4% of Kapstone 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

Neenah pays an annual dividend of $1.64 per share and has a dividend yield of 2.0%. Kapstone pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Neenah pays out 38.0% of its earnings in the form of a dividend. Kapstone pays out 30.3% 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. Neenah has increased its dividend for 7 consecutive years. Neenah is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for Neenah and Kapstone, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Neenah 0 1 0 0 2.00
Kapstone 0 7 1 0 2.13

Kapstone has a consensus target price of $30.80, indicating a potential downside of 10.62%. Given Kapstone’s stronger consensus rating and higher probable upside, analysts plainly believe Kapstone is more favorable than Neenah.

Earnings and Valuation

This table compares Neenah and Kapstone’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Neenah $979.90 million 1.41 $80.30 million $4.32 19.09
Kapstone $3.32 billion 1.02 $243.50 million $1.32 26.11

Kapstone has higher revenue and earnings than Neenah. Neenah is trading at a lower price-to-earnings ratio than Kapstone, indicating that it is currently the more affordable of the two stocks.

Summary

Kapstone beats Neenah on 10 of the 17 factors compared between the two stocks.

About Neenah

Neenah, Inc. produces and sells technical products, and fine paper and packaging products worldwide. The company's Technical Products segment offers filtration media for transportation, water, and other uses; saturated and unsaturated crepe, and flat paper tapes to manufacturers; and coated lightweight abrasive paper for automotive, construction, metal, and woodworking industries. It also provides digital image transfer media; label and tag products for variable and digital printing; latex saturated and coated papers; premask, medical packaging, publishing, and security papers; and clean room and durable printing papers, release papers, and furniture backers. Its Fine Paper and Packaging segment manufactures and sells premium writing, text, cover, and specialty papers and envelopes used in commercial printing services, corporate identity packages, and advertising collaterals. This segment also provides premium packaging products for retail, cosmetics, spirits, and electronics end-use markets; bright papers for direct mail, advertising insert, scrapbook, and marketing collateral applications; and business papers for professionals and small businesses, as well as translucent and art papers, papers for optical scanning, and other specialized applications. The company markets its products under the JET-PRO SofStretch, KIMDURA, PREVAIL, NEENAH, GESSNER, CLASSIC, CLASSIC CREST, ESSE, ENVIRONMENT, CAPITOL BOND, ROYAL SUNDANCE, SOUTHWORTH, TOUCHE, CRANE'S CREST, CRANE'S BOND, CRANE'S LETTRA, SO…SILK, PLIKE, STARDREAM, CONVERD, ESTATE LABEL, Neenah, PELLAQ, KIVAR, SKIVERTEX, ILLUSIO, SENZO, ASTROBRIGHTS, and CREATIVE COLLECTION names. It sells its products through authorized paper distributors, converters, retailers, specialty businesses, and direct sales. The company was formerly known as Neenah Paper, Inc. and changed its name to Neenah, Inc. in January 2018. Neenah, Inc. was founded in 2004 and is headquartered in Alpharetta, Georgia.

About Kapstone

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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