The 10-second takeaway
For the quarter ended June 30 (Q2), Domtar met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share contracted significantly. GAAP earnings per share dropped to a loss.
Margins dropped across the board.
Domtar reported revenue of $1.31 billion. The eight analysts polled by S&P Capital IQ wanted to see revenue of $1.31 billion on the same basis. GAAP reported sales were 4.1% lower than the prior-year quarter's $1.37 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
EPS came in at $0.48. The 13 earnings estimates compiled by S&P Capital IQ predicted $0.35 per share. Non-GAAP EPS of $0.48 for Q2 were 70% lower than the prior-year quarter's $1.61 per share. GAAP EPS were -$1.38 for Q2 versus $1.61 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
For the quarter, gross margin was 17.5%, 390 basis points worse than the prior-year quarter. Operating margin was -0.5%, 820 basis points worse than the prior-year quarter. Net margin was -3.5%, 780 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $1.39 billion. On the bottom line, the average EPS estimate is $1.23.
Next year's average estimate for revenue is $5.32 billion. The average EPS estimate is $4.08.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 118 members out of 142 rating the stock outperform, and 24 members rating it underperform. Among 49 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 45 give Domtar a green thumbs-up, and four give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Domtar is hold, with an average price target of $83.86.
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