In the grand scheme of things, it's hard to determine anything with precision with only a month's worth of data. As an example, last year the Red Sox took off like a bolt of lightning in April, but by June were so far behind the hated New York Yankees that the Sox season was in danger of becoming irrelevant. Of course, we all know how 2004 turned out for the Red Sox.
I'm not bringing this analogy up to torture Yankees fans (OK, maybe just a little) but because Motley Fool Hidden GemNeenah Paper (NYSE:NP) issued its first earnings press release last night, which covered both the fourth quarter and fiscal 2004. For those inclined to jump directly to earnings, those numbers weren't pretty, as the company lost $4.73 for the quarter and $1.79 for the year. One important note to keep in mind about these financials, though, is that they only represent one month for Neenah as a completely separate entity from former parent Kimberly-Clark (NYSE:KMB). As such, many expenses that were incurred are not very reflective of a year's operations, because they either are one-time start-up expenses or, in the case of debt, don't reflect a year's worth of interest.
Listening to the company's earnings call I was struck by two things. First, the frankness with which questions were being answered was great to hear considering that the company doesn't have a great deal of history to lean on. Second, the call briefly touched on the company's ownership of 1 million acres of timberland in Nova Scotia. Now, I think it's a pretty safe bet that timberland in Nova Scotia doesn't fetch the same kind of interest as real estate in Manhattan. This timberland, being in Nova Scotia, is also likely to be less valuable than the timberland that Plum Creek Timber (NYSE:PCL) picked up last year for $680 an acre. But, I think it's also a safe bet that Neenah's timberland is worth much more than the $5 million that it's valued at on the company's balance sheet.
It's important to note that no specific plans were discussed for this timberland and that this is a paper company, so it does need timberland to actually make paper. That said, there's a fair amount of hidden value sitting on Neenah's balance sheet that's bound to be realized in shape or form in the not too distant future.
Want to read more about the timber and paper industries?
Fool contributor Nathan Parmelee is a die-hard Red Sox fan and owns shares in Neenah Paper.
