A month has gone by since the last earnings report for Domtar . Shares have added about 20.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Domtar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Domtar's Earnings & Sales Top Estimates, Down Y/Y
Domtar reported third-quarter 2020 adjusted earnings of 33 cents per share, as against the Zacks Consensus Estimate of a loss of 28 cents. However, the bottom-line figure plunged 63% from the prior-year quarter.
Including one-time items, Domtar reported loss per share of $1.67 in the quarter as against the earnings per share of 32 cents recorded in the prior-year quarter.
Consolidated sales declined 12.4% year over year to $1,124 million. The top-line figure, however, beat the Zacks Consensus Estimate of $1,054 million.
Operational Highlight
Consolidated adjusted operating income came in at $43 million in the September-end quarter compared with the year-ago quarter’s $73 million. This downside resulted from lower volume and unfavorable productivity.
Segmental Performance
Quarterly revenues of the Pulp and Paper segment came in at $899 million, down 16.7% year over year. Adjusted operating income for the segment was $38 million in the third quarter, down from the year-earlier reported figure of $68 million.
Sales in the Personal Care segment increased 10.9% year over year to $243 million. The adjusted operating income for the segment came in at $16 million, up from the $9 million reported in the comparable period last year.
Balance Sheet & Cash Flow
The company had cash and cash equivalents of $218 million as of Sep 30, 2020, up from $61 million as of Dec 31, 2019. Net debt-to-total capitalization ratio was 28% as of Sep 30, 2020, up from the 26% as of Sep 30, 2019.
Domtar generated $121 million of cash from operating activities during the September-end quarter compared with the $108 million reported in the year-ago quarter.
Outlook
The company expects sequentially flat paper volume in the current quarter, while seasonality is likely to affect mix. Pulp markets are anticipated to gradually improve on better demand environment, maintenance outages and restocking in China. Domtar believes the Personal Care business will continue to gain from higher usage and new customer wins. Overall raw material costs will likely be stable, while planned maintenance costs will be lower in the December-end year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 396.43% due to these changes.
VGM Scores
At this time, Domtar has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Domtar has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Domtar (UFS) Up 20.1% Since Last Earnings Report?
A month has gone by since the last earnings report for Domtar . Shares have added about 20.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Domtar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Domtar's Earnings & Sales Top Estimates, Down Y/Y
Domtar reported third-quarter 2020 adjusted earnings of 33 cents per share, as against the Zacks Consensus Estimate of a loss of 28 cents. However, the bottom-line figure plunged 63% from the prior-year quarter.
Including one-time items, Domtar reported loss per share of $1.67 in the quarter as against the earnings per share of 32 cents recorded in the prior-year quarter.
Consolidated sales declined 12.4% year over year to $1,124 million. The top-line figure, however, beat the Zacks Consensus Estimate of $1,054 million.
Operational Highlight
Consolidated adjusted operating income came in at $43 million in the September-end quarter compared with the year-ago quarter’s $73 million. This downside resulted from lower volume and unfavorable productivity.
Segmental Performance
Quarterly revenues of the Pulp and Paper segment came in at $899 million, down 16.7% year over year. Adjusted operating income for the segment was $38 million in the third quarter, down from the year-earlier reported figure of $68 million.
Sales in the Personal Care segment increased 10.9% year over year to $243 million. The adjusted operating income for the segment came in at $16 million, up from the $9 million reported in the comparable period last year.
Balance Sheet & Cash Flow
The company had cash and cash equivalents of $218 million as of Sep 30, 2020, up from $61 million as of Dec 31, 2019. Net debt-to-total capitalization ratio was 28% as of Sep 30, 2020, up from the 26% as of Sep 30, 2019.
Domtar generated $121 million of cash from operating activities during the September-end quarter compared with the $108 million reported in the year-ago quarter.
Outlook
The company expects sequentially flat paper volume in the current quarter, while seasonality is likely to affect mix. Pulp markets are anticipated to gradually improve on better demand environment, maintenance outages and restocking in China. Domtar believes the Personal Care business will continue to gain from higher usage and new customer wins. Overall raw material costs will likely be stable, while planned maintenance costs will be lower in the December-end year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 396.43% due to these changes.
VGM Scores
At this time, Domtar has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Domtar has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.