Will A Negative Earnings Report Hurt Deltic Timber (DEL) Stock In After-Market Trading Today?

NEW YORK (TheStreet) -- Deltic Timber (DEL) announced that preliminary net income for the first quarter of 2014 was $4.9 million, or 39 cents per share, a 28% drop from the $6.8 million, or 53 cents per share, it posted in the first quarter of 2013. 

Sales for the quarter were up 33% year over year to $55.38 million from $41.56 million in 2013.

The lumber manufacturer fell short of analysts EPS estimate of 54 cents per share.

CEO Ray C. Dillon blamed the disappointing numbers on harsh winter weather conditions.

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TheStreet Ratings team rates DELTIC TIMBER CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DELTIC TIMBER CORP (DEL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 31.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 164.50% to $8.17 million when compared to the same quarter last year. In addition, DELTIC TIMBER CORP has also vastly surpassed the industry average cash flow growth rate of 37.58%.
  • DELTIC TIMBER CORP's earnings per share declined by 5.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DELTIC TIMBER CORP increased its bottom line by earning $2.05 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($2.30 versus $2.05).
  • The current debt-to-equity ratio, 0.34, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that DEL's debt-to-equity ratio is low, the quick ratio, which is currently 0.54, displays a potential problem in covering short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Paper & Forest Products industry and the overall market, DELTIC TIMBER CORP's return on equity is below that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: DEL Ratings Report
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