Financial Analysis: Greif (NYSE:GEF.B) vs. Smurfit Westrock (NYSE:SW)

Smurfit Westrock (NYSE:SW) and Greif (NYSE:GEF.B) are both basic materials companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Insider and Institutional Ownership

83.4% of Smurfit Westrock shares are owned by institutional investors. Comparatively, 5.1% of Greif shares are owned by institutional investors. 0.5% of Smurfit Westrock shares are owned by company insiders. Comparatively, 16.2% of Greif shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations for Smurfit Westrock and Greif, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Smurfit Westrock	0	2	8	0	2.80
Greif	0	0	0	0	0.00

Smurfit Westrock presently has a consensus target price of $58.20, indicating a potential upside of 25.35%. Given Smurfit Westrock’s stronger consensus rating and higher probable upside, analysts plainly believe Smurfit Westrock is more favorable than Greif.

Dividends

Smurfit Westrock pays an annual dividend of $1.72 per share and has a dividend yield of 3.7%. Greif pays an annual dividend of $3.24 per share and has a dividend yield of 5.4%. Smurfit Westrock pays out 141.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Greif pays out 90.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Greif is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Smurfit Westrock has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.Comparatively, Greif has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500.

Earnings & Valuation

This table compares Smurfit Westrock and Greif”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Smurfit Westrock	$25.84 billion	0.94	$319.00 million	$1.22	38.06
Greif	$5.51 billion	0.52	$268.80 million	$3.57	16.88

Smurfit Westrock has higher revenue and earnings than Greif. Greif 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 Smurfit Westrock and Greif’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Smurfit Westrock	0.63%	6.16%	2.42%
Greif	4.81%	11.84%	3.74%

Summary

Smurfit Westrock beats Greif on 9 of the 16 factors compared between the two stocks.

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.

About Greif

Greif, Inc. produces and sells industrial packaging products and services worldwide. It operates through four segments: Rigid Industrial Packaging & Services; Paper Packaging & Services; Flexible Products & Services; and Land Management. The Rigid Industrial Packaging & Services segment offers rigid industrial packaging products, including steel, fiber, and plastic drums; rigid intermediate bulk containers; closure systems for industrial packaging products; transit protection products; water bottles, and remanufactured and reconditioned industrial containers; and services, such as container life cycle management, filling, logistics, warehousing, and other packaging services. This segment sells its products to customers in the chemicals, paints and pigments, food and beverage, petroleum, industrial coatings, agricultural, pharmaceutical and minerals, and other industries. The Paper Packaging & Services segment provides containerboards, corrugated sheets, corrugated containers, and other corrugated and specialty products to customers in the packaging, automotive, food, and building products markets. This segment's corrugated container products are used to ship various products, such as home appliances, small machinery, grocery products, automotive components, books, and furniture, as well as various other applications. The Flexible Products & Services segment offers flexible intermediate bulk containers comprising polypropylene-based woven fabric, as well as related services to the agricultural, food, and other industries. The Land Management segment engages in harvesting and regeneration of timber properties; and sale of timberland and special use land. As of October 31, 2020, this segment owned approximately 244,000 acres of timber property in the southeastern United States. The company was formerly known as Greif Bros. Corporation and changed its name to Greif, Inc. in 2001. Greif, Inc. was founded in 1877 and is based in Delaware, Ohio.