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
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.