Comparing Mercer International (NASDAQ:MERC) and Lee & Man Paper Manufacturing (OTCMKTS:LMPMY)

Mercer International (NASDAQ:MERC) and Lee & Man Paper Manufacturing (OTCMKTS:LMPMY) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Dividends

Mercer International pays an annual dividend of $0.30 per share and has a dividend yield of 4.9%. Lee & Man Paper Manufacturing pays an annual dividend of $0.13 per share and has a dividend yield of 4.5%. Mercer International pays out -8.7% of its earnings in the form of a dividend. Lee & Man Paper Manufacturing pays out 3.2% 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. Mercer International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Mercer International and Lee & Man Paper Manufacturing’s top-line revenue, earnings per share (EPS) 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
Lee & Man Paper Manufacturing	N/A	N/A	N/A	$4.02	0.72

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

Analyst Recommendations

This is a breakdown of current recommendations for Mercer International and Lee & Man Paper Manufacturing, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercer International	0	5	0	0	2.00
Lee & Man Paper Manufacturing	0	0	0	0	N/A

Mercer International presently has a consensus price target of $9.25, suggesting a potential upside of 50.16%. Given Mercer International’s higher possible upside, analysts clearly believe Mercer International is more favorable than Lee & Man Paper Manufacturing.

Profitability

This table compares Mercer International and Lee & Man Paper Manufacturing’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%
Lee & Man Paper Manufacturing	N/A	N/A	N/A

Insider & Institutional Ownership

85.8% of Mercer International shares are held by institutional investors. Comparatively, 0.0% of Lee & Man Paper Manufacturing shares are held by institutional investors. 4.2% of Mercer International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Mercer International beats Lee & Man Paper Manufacturing 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 Lee & Man Paper Manufacturing

Lee & Man Paper Manufacturing Limited, an investment holding company, engages in the manufacture and trading of packaging papers, pulps, and tissue papers in the People's Republic of China, Vietnam, Malaysia, Macau, and Hong Kong. The company operates through Packaging Paper, Tissue Paper, and Pulp segments. It offers various pulp products, such as dissolved pulps for use in viscose chemical fibers, bamboo fibers, glass papers, acetate fibers, refined rayons, etc.; unbleached bamboo kraft pulps for use in ecru life papers, environmental table wares, food bags, etc.; and bleached bamboo kraft pulps for use in tissue papers, fine papers, cigarette papers, cup papers, etc. The company also provides containerboard products, including kraft and test linerboards for use in cartons, graphic carton, paper bags, file boxes, paperboards, wall papers, etc.; and corrugating liners for use in corrugated layer and septi-layer of paperboards, and honeycomb-like products. In addition, it offers coated duplex board products for use in graphic cartons, color card printing, and offset printing, as well as in packaging of commodities, household appliances, IT products, medicine/health care products, food products, toys, gifts, ceramic products, stationery products, beverages, etc.; toilet rolls; and unbleached paper for use in various applications, such as baby care, menstruation, facial, sensitive skin, table, kitchen, etc. Lee & Man Paper Manufacturing Limited was founded in 1994 and is headquartered in North Point, Hong Kong.