Critical Review: Smurfit Kappa Group (OTCMKTS:SMFTF) versus CCL Industries (OTCMKTS:CCDBF)

CCL Industries (OTCMKTS:CCDBF) and Smurfit Kappa Group (OTCMKTS:SMFTF) are both consumer cyclical companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, risk, earnings, valuation, institutional ownership and dividends.

Profitability

This table compares CCL Industries and Smurfit Kappa Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CCL Industries	N/A	N/A	N/A
Smurfit Kappa Group	N/A	N/A	N/A

Institutional & Insider Ownership

37.2% of CCL Industries shares are held by institutional investors. Comparatively, 42.0% of Smurfit Kappa Group shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for CCL Industries and Smurfit Kappa Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CCL Industries	0	0	1	0	3.00
Smurfit Kappa Group	0	0	0	0	0.00

CCL Industries currently has a consensus price target of $84.00, indicating a potential upside of 50.46%. Given CCL Industries’ stronger consensus rating and higher possible upside, equities research analysts clearly believe CCL Industries is more favorable than Smurfit Kappa Group.

Valuation & Earnings

This table compares CCL Industries and Smurfit Kappa Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CCL Industries	N/A	N/A	N/A	$5.45	10.24
Smurfit Kappa Group	N/A	N/A	N/A	$1.19	38.02

CCL Industries is trading at a lower price-to-earnings ratio than Smurfit Kappa Group, indicating that it is currently the more affordable of the two stocks.

Dividends

CCL Industries pays an annual dividend of $1.02 per share and has a dividend yield of 1.8%. Smurfit Kappa Group pays an annual dividend of $0.46 per share and has a dividend yield of 1.0%. CCL Industries pays out 18.6% of its earnings in the form of a dividend. Smurfit Kappa Group pays out 38.8% 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. CCL Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

CCL Industries beats Smurfit Kappa Group on 6 of the 8 factors compared between the two stocks.

About CCL Industries

CCL Industries Inc. manufactures and sells labels, consumer printable media products, technology-driven label solutions, polymer banknote substrates, and specialty films. It operates through CCL, Avery, Checkpoint, and Innovia segments. The CCL segment converts pressure sensitive and extruded film materials for a range of decorative, instructional, security, and functional applications for government institutions and global customers in consumer packaging, healthcare, chemicals, consumer durables, electronic device, and automotive markets. The Avery segment supplies labels, specialty converted media, and software solutions to enable short-run digital printing in businesses and homes alongside complementary products sold through distributors, mass-market stores, and e-commerce retailers. The Checkpoint segment engages in developing radio frequency and radio frequency identification-based technology systems for loss prevention and inventory management applications, including labeling and tagging solutions for the retail and apparel industries. The Innovia segment supplies biaxially oriented polypropylene films to customers in the pressure sensitive label materials, flexible packaging, and consumer packaged goods industries. The company operates in Canada, the United States, Puerto Rico, Mexico, Brazil, Chile, Argentina, Europe, Asia, Australia, Africa, and New Zealand. CCL Industries Inc. was founded in 1951 and is headquartered in Toronto, Canada.

About Smurfit Kappa Group

Smurfit Kappa Group Plc, together with its subsidiaries, manufactures, distributes, and sells containerboard, corrugated containers, and other paper-based packaging products in Ireland, Germany, France, Mexico, rest of Europe, and other Americas. The company offers e-commerce, retail, consumer, industrial, bottle, protective, heavy-duty, hexacomb, and various punnet packaging products; composite cardboard tubes, bags, and sacks; and bag-in-box, a packaging system that comprises films, accessories, bags, taps, and boxes. It also provides point of sale displays; cardboards of social distancing; corrugated sheet boards, solid board sheets, folding carton sheet boards, sack Kraft papers, MG brown Kraft papers, preprint products, agro-papers, technical papers, BanaBag, and Catcher Board MB12; and various types of containerboards, such as kraftliners, testliners, and containerboard flutings. In addition, the company offers recycling solutions to cardboard and paper products; and supplies packaging machinery. It primarily serves consumer goods, industrial goods, and food and drink sectors. Smurfit Kappa Group Plc was founded in 1934 and is headquartered in Dublin, Ireland.