The 10-second takeaway
For the quarter ended March 31 (Q1), Domtar met expectations on revenues and whiffed on earnings per share.
Compared to the prior-year quarter, revenue shrank slightly and GAAP earnings per share shrank significantly.
Margins dropped across the board.
Domtar tallied revenue of $1.40 billion. The five analysts polled by S&P Capital IQ hoped for net sales of $1.40 billion on the same basis. GAAP reported sales were 1.8% lower than the prior-year quarter's $1.42 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $1.65. The 11 earnings estimates compiled by S&P Capital IQ averaged $1.99 per share. GAAP EPS of $0.76 for Q1 were 76% lower than the prior-year quarter's $3.14 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 22.2%, 610 basis points worse than the prior-year quarter. Operating margin was 8.2%, 710 basis points worse than the prior-year quarter. Net margin was 2.0%, 730 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.44 billion. On the bottom line, the average EPS estimate is $1.90.
Next year's average estimate for revenue is $5.69 billion. The average EPS estimate is $8.32.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 111 members out of 134 rating the stock outperform, and 23 members rating it underperform. Among 41 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 36 give Domtar a green thumbs-up, and five give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Domtar is outperform, with an average price target of $108.54.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. 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.