Domtar Earnings: Here’s Why Investors are Not Excited Now

Domtar Corporation (NYSE:UFS) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1.45%.

Markets are at 5-year highs! Discover the best stocks to own. Click here for our fresh Feature Stock Pick now!

Domtar Corporation Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 21.82% to $1.29 in the quarter versus EPS of $1.65 in the year-earlier quarter.

Revenue: Decreased 3.79% to $1.35 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Domtar Corporation reported adjusted EPS income of $1.29 per share. By that measure, the company missed the mean analyst estimate of $1.46. It missed the average revenue estimate of $1.36 billion.

Quoting Management: “The first quarter results in our paper business were disappointing and this is due to low productivity, resulting in high costs,” said John D. Williams, President and Chief Executive Officer. “While we benefited from better paper pricing than we expected, the reconfiguration of our Marlboro, South Carolina operations resulted in multiple paper grade transfers, upsetting productivity at several of our paper mills. We anticipate a return to a more normalized productivity in the quarters to come.” John D. Williams added, “Our personal care business remains on track and the capital investments should start to deliver the expected benefits towards the end of 2013.”

Key Stats (on next page)…

Revenue increased 1.36% from $1.33 billion in the previous quarter. EPS decreased 1.53% from $1.31 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.79 to a profit $1.39. For the current year, the average estimate has moved down from a profit of $7.21 to a profit of $6.56 over the last ninety days.

Stocks with improving earnings metrics are worthy of your extra attention. In fact, “E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our CHEAT SHEET investing framework for this very reason. Don’t waste another minute – click here and get our CHEAT SHEET stock picks now.

(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

More Articles About:   , , ,  

More from The Cheat Sheet