With a dedicated regional focus, shares of paper and paper
KapStone Paper and Packaging Corporation
) have steadily been on the uptrend from June 2013. The shares
are currently trading at $30.56 as on March 18, 2014, which
translates to a phenomenal year-over-year return of 121.5%.
KapStone primarily manufactures containerboard, corrugated
products and specialty paper products. It is the largest producer
of kraft paper in the U.S., which is utilized for making bags for
agricultural products, pet food, baking products, cement and
chemicals, and grocery bags. Despite a pan-American presence, the
company largely focuses on the regional markets, operating 4
paper mills and 22 converting plants in the U.S.
KapStone registered record fourth quarter and full year 2013
results primarily driven by the accretive acquisition of Longview
Fibre Paper and Packaging, Inc. Consolidated quarterly net sales
increased 87% year over year to $563 million as Longview
contributed $241 million of incremental revenues. The company
also sold 703,000 tons of paper during the quarter compared with
408,000 tons in the year-earlier period.
Operating income for fourth quarter 2013 improved an astronomical
289% on a year-over-year basis to $74 million on the back of the
Longview acquisition and higher containerboard and corrugated
product prices, partially offset by higher fiber costs and a less
favorable product mix.
Consolidated net sales for full year 2013 increased 44% year over
year to $1,748 million. Operating income for the year doubled to
$220 million again due to the Longview acquisition and higher
selling prices, partially offset by higher fiber and maintenance
Cash flow from operating activities improved to $130 million
during the reported quarter from $40 million in the prior-year
quarter. This enabled KapStone to repay $89 million of debt,
including a voluntary prepayment of $40 million. As a result, the
company improved upon the debt leverage ratio to 2.7x from 3.8x.
Consequently, the company will be able to reduce its interest
margin spread on its bank loans by 25 bps from early March 2014.
This Zacks Rank #3 (Hold) stock is currently trading at a forward
P/E of 12.7x and is likely to continue the growth momentum in the
near future with long-term earnings growth expectation of 5.0%.
Other stocks in the industry that warrant a look include
Neenah Paper, Inc.
Clearwater Paper Corporation
Fibria Celulose SA
), each carrying a Zacks Rank #2 (Buy).
CLEARWATER PAPR (CLW): Free Stock Analysis
FIBRIA CELULOSE (FBR): Free Stock Analysis
KAPSTONE PAPER (KS): Free Stock Analysis
NEENAH PAPER (NP): Free Stock Analysis Report
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