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Clearwater Paper Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of pulp-based products manufacturer and distributor Clearwater Paper (NYSE: CLW  ) are shooting higher by 14% today following the company’s second-quarter earnings report.

So what: Shareholders may have been crying the blues at first, but this tissue producer had a few tricks up its sleeve which no one saw coming. For the quarter, the company earned $1.17 on revenue of $494.6 million. The revenue figure skirted past Wall Street’s consensus estimates, but the earnings figure was well shy of the $1.62 that everyone was looking for. Thankfully for shareholders, the company increased its cost-saving forecast associated with its purchase of Cellu Tissue, announced a $30 million share repurchase program, and announced a 2-for-1 stock split.

Now what: There’s absolutely nothing wrong with better cost synergies and a stock buyback, but input costs continue to plague Clearwater. For the quarter, the average selling cost for its tissue products fell from $2620 per ton to $2088 per ton. Input costs should be a pressing issue for many quarters to come, so I’m not exactly chomping at the bit to call this a great value after today’s pop.

Crave more input? Consider adding Clearwater Paper to your watchlist.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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10/26/2016 4:02 PM
CLW $53.13 Down -2.49 -4.48%
Clearwater Paper CAPS Rating: ****