Clearwater Paper Corp. – Value Analysis (NYSE:CLW) : October 6, 2017

Capitalcube gives Clearwater Paper Corp. a score of 31.

Our analysis is based on comparing Clearwater Paper Corp. with the following peers – P. H. Glatfelter Company, International Paper Company, KapStone Paper and Packaging Corporation, Hadera Paper Ltd, Orchids Paper Products Company, Neenah Paper, Inc., UPM-Kymmene Oyj Sponsored ADR, Packaging Corporation of America, Kimberly-Clark Corporation and Stora Enso Oyj Sponsored ADR Class R (GLT-US, IP-US, KS-US, HAIPF-US, TIS-US, NP-US, UPMKY-US, PKG-US, KMB-US and SEOAY-US).

Investment Outlook

Clearwater Paper Corp. has a fundamental score of 31 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It’s current Price/Book of 1.54 is about median in its peer group.
  • The market expects CLW-US‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • CLW-US has relatively low profit margins and median asset efficiency.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, CLW-US‘s return on assets has declined from about median to less than the median among its peers suggesting that the company’s historical competitiveness in operations is slipping away.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • CLW-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
  • CLW-US seems to be constrained by the current level of debt.

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Leverage & Liquidity

CLW-US is debt-constrained.

  • With debt at a relatively high 47.99% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 36.10%), and interest coverage level of 2.15x, CLW-US seems debt-constrained.
  • All 10 peers for the company have an outstanding debt balance.

CLW-US has moved to a relatively high leverage from an Some Capacity profile at the recent year-end.

  • CLW-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 4.06x in 2015.
  • The decrease in its interest coverage to 2.15x from 3.29x (in 2016) was also accompanied by a decrease in its peer median during this period to 3.72x from 4.44x.
  • CLW-US‘s debt-EV is its highest relative to the last five years and compares to a low of 27.64% in 2014.
  • The increase in its debt-EV to 47.99% from 40.76% (in 2016) was also accompanied by an increase in its peer median during this period to 36.10% from 35.04%.
  • Relative to peers, debt-EV rose 6.17 percentage points.

Access the detailed analysis for Clearwater Paper Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
P. H. Glatfelter Company 36.1 1.59 1.02 18.37
International Paper Company 33.41 1.45 2.4 25.76
KapStone Paper and Packaging Corporation 44.42 2.19 3.72 17.51
Hadera Paper Ltd 46.47 1.89 1.52 15.7
Orchids Paper Products Company 55.32 0.22 0.72 19.29
Neenah Paper, Inc. 14.16 2.55 9.44 55.87
UPM-Kymmene Oyj Sponsored ADR 17.56 1.72 23.37 72.23
Packaging Corporation of America 20.54 2.45 9.25 32.19
Kimberly-Clark Corporation 15.17 0.92 10.11 36.64
Stora Enso Oyj Sponsored ADR Class R 40.98 1.17 3.9 28.94
Clearwater Paper Corporation 47.99 1.16 2.15 21.45
Peer Median 36.1 1.59 3.72 25.76
Best In Class 14.16 2.55 23.37 72.23

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Company Profile

Clearwater Paper Corp. engages in the manufacturing and selling of private label tissue, paperboard, and pulp-based products. It operates through the Consumer Products and Pulp and Paperboard segments. The Consumer Products segment manufactures and sells a complete line of at-home tissue products as well as Away From Home products. The Pulp and Paperboard segment produce and markets bleached paperboard for the high-end segment of the packaging industry. The company was founded on December 9, 2008 and is headquartered in Spokane, WA.


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