Reviewing Mercer International (NASDAQ:MERC) and Nine Dragons Paper (OTCMKTS:NDGPF)

Mercer International (NASDAQ:MERC) and Nine Dragons Paper (OTCMKTS:NDGPF) are both basic materials companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Profitability

This table compares Mercer International and Nine Dragons Paper’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercer International	-11.27%	-26.21%	-6.47%
Nine Dragons Paper	N/A	N/A	N/A

Earnings & Valuation

This table compares Mercer International and Nine Dragons Paper’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercer International	$1.99 billion	0.21	-$242.06 million	($3.43)	-1.80
Nine Dragons Paper	N/A	N/A	N/A	$0.38	0.99

Nine Dragons Paper has lower revenue, but higher earnings than Mercer International. Mercer International is trading at a lower price-to-earnings ratio than Nine Dragons Paper, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings for Mercer International and Nine Dragons Paper, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercer International	0	5	0	0	2.00
Nine Dragons Paper	0	0	0	0	N/A

Mercer International currently has a consensus target price of $9.25, suggesting a potential upside of 50.16%. Given Mercer International’s higher possible upside, equities research analysts clearly believe Mercer International is more favorable than Nine Dragons Paper.

Insider & Institutional Ownership

85.8% of Mercer International shares are held by institutional investors. Comparatively, 13.8% of Nine Dragons Paper shares are held by institutional investors. 4.2% of Mercer International shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company 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 4.9%. Nine Dragons Paper pays an annual dividend of $0.10 per share and has a dividend yield of 26.5%. Mercer International pays out -8.7% of its earnings in the form of a dividend. Nine Dragons Paper pays out 26.4% 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.

Summary

Nine Dragons Paper beats Mercer International on 6 of the 11 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 Nine Dragons Paper

Nine Dragons Paper (Holdings) Limited, together with its subsidiaries, engages in the production and sale of packaging paper, recycled printing and writing paper, and specialty paper and pulp products in the People's Republic of China. The company offers linerboard products, including kraft, test, white top, and coated linerboards; corrugating medium containerboard products; corrugated cardboard products; carton box products; corrugated sheet products; and coated duplex boards. It also provides recycled printing and writing paper, such as uncoated wood-free paper and office paper; capacitor tissue paper; low and high voltage, ultra-high-voltage transformer coil winding, and heat-resistant insulating paper; and recycled and kraft pulp products. It also operates in Vietnam, Malaysia, and the United States. The company was founded in 1995 and is headquartered in Dongguan, the People's Republic of China. Nine Dragons Paper (Holdings) Limited operates as a subsidiary of Best Result Holdings Limited.