Smurfit Westrock (NYSE:SW) and Packaging Co. of America (NYSE:PKG) Critical Comparison

Packaging Co. of America (NYSE:PKG) and Smurfit Westrock (NYSE:SW) are both large-cap industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Volatility & Risk

Packaging Co. of America has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, Smurfit Westrock has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500.

Dividends

Packaging Co. of America pays an annual dividend of $5.00 per share and has a dividend yield of 2.3%. Smurfit Westrock pays an annual dividend of $1.21 per share and has a dividend yield of 2.7%. Packaging Co. of America pays out 62.5% of its earnings in the form of a dividend. Smurfit Westrock pays out 101.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Packaging Co. of America has raised its dividend for 14 consecutive years.

Earnings & Valuation

This table compares Packaging Co. of America and Smurfit Westrock”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Packaging Co. of America	$7.93 billion	2.50	$765.20 million	$8.00	27.60
Smurfit Westrock	$12.46 billion	0.92	-$22.40 million	$1.19	37.36

Packaging Co. of America has higher earnings, but lower revenue than Smurfit Westrock. Packaging Co. of America is trading at a lower price-to-earnings ratio than Smurfit Westrock, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Packaging Co. of America and Smurfit Westrock’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Packaging Co. of America	9.06%	18.21%	8.42%
Smurfit Westrock	1.36%	7.13%	2.67%

Analyst Recommendations

This is a breakdown of current ratings for Packaging Co. of America and Smurfit Westrock, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Packaging Co. of America	0	4	3	0	2.43
Smurfit Westrock	0	3	3	0	2.50

Packaging Co. of America presently has a consensus target price of $203.33, indicating a potential downside of 7.90%. Smurfit Westrock has a consensus target price of $56.50, indicating a potential upside of 27.08%. Given Smurfit Westrock’s stronger consensus rating and higher probable upside, analysts clearly believe Smurfit Westrock is more favorable than Packaging Co. of America.

Insider and Institutional Ownership

89.8% of Packaging Co. of America shares are owned by institutional investors. Comparatively, 83.4% of Smurfit Westrock shares are owned by institutional investors. 1.6% of Packaging Co. of America shares are owned by company insiders. Comparatively, 0.5% of Smurfit Westrock shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Packaging Co. of America beats Smurfit Westrock on 10 of the 16 factors compared between the two stocks.

About Packaging Co. of America

Packaging Corporation of America manufactures and sells containerboard and corrugated packaging products in the United States. The company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment offers various containerboard and corrugated packaging products, such as conventional shipping containers used to protect and transport manufactured goods; multi-color boxes and displays that help to merchandise the packaged product in retail locations; and honeycomb protective packaging products, as well as packaging for meat, fresh fruit and vegetables, processed food, beverages, and other industrial and consumer products. This segment sells its corrugated products through a direct sales and marketing organization, independent brokers, and distribution partners. The Paper segment manufactures and sells commodity and specialty papers, as well as communication papers, including cut-size office papers, and printing and converting papers. This segment sells white papers through its sales and marketing organization. The Corporate and Other segment includes corporate support staff services and related assets and liabilities; and transportation assets, such as rail cars and trucks for transportation. Packaging Corporation of America was founded in 1867 and is headquartered in Lake Forest, Illinois.

About Smurfit Westrock

Smurfit Westrock Plc, together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products in Ireland and internationally. The company produces containerboard that it converts into corrugated containers or sells to third parties, as well as produces other types of paper, such as consumer packaging board, sack paper, graphic paper, solid board and graphic board, and other paper-based packaging products, such as consumer packaging, solid board packaging, paper sacks, and other packaging products, including bag-in-box. It also produces linerboard and corrugated medium, paperboard, and non-packaging grades of paper, as well as converted products, such as folding cartons and corrugated boxes, and other products; recycled paper-based packaging products; and packaging machinery. The company primarily serves food and beverage, e-commerce, retail, consumer goods, industrial, and foodservice markets. Smurfit Westrock Plc was founded in 1934 and is headquartered in Dublin, Ireland.