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"We rate CLEARWATER PAPER CORP (CLW) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.1%. Since the same quarter one year prior, revenues slightly increased by 0.5%. 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.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- Even though the current debt-to-equity ratio is 1.16, it is still below the industry average, suggesting that this level of debt is acceptable within the Paper & Forest Products industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.96 is weak.
- The gross profit margin for CLEARWATER PAPER CORP is rather low; currently it is at 18.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -5.76% trails that of the industry average.
- Net operating cash flow has decreased to $37.17 million or 17.06% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: CLW Ratings Report