Resolute Forest Hits a 52-Week High - Analyst Blog


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Shares of paper and paper products manufacturer Resolute Forest Products Inc. ( RFP ) scaled a 52-week high of $21.59 on Feb 21, before closing the trading session nominally lower at $21.45 for a healthy year-over-year return of 61.8%. Resolute Forest Products' share prices have steadily been on the uptrend from Dec 2013.

This Zacks Rank #1 (Strong Buy) stock is currently trading at a forward P/E of 17.3x and is likely to continue the growth momentum in the near future.

Growth Drivers

Resolute Forest Products reported strong fourth quarter 2013 results as both revenues and adjusted earnings increased year over year. Excluding non-recurring items, adjusted earnings for the reported quarter were 34 cents per share compared with 30 cents in the year-ago quarter. Revenues for the quarter increased 2% year over year to $1,150 million as the network ran at near capacity maintaining solid production levels.

Despite headwinds from higher-than-expected maintenance costs, higher overall fiber costs and increased fuel costs, the company was able to lower overall manufacturing costs by over $30 million in 2013. This was achieved through asset optimization, mill restructuring initiatives and increased external power sales from co-generation facilities.

Moving ahead, Resolute Forest Products expects to maintain stable newsprint volume in the first quarter of 2014 leveraging on its operating scale, financial strength and low-cost operating platform. The company also expects lumber pricing and shipments to remain steady based on the positive momentum of U.S. housing starts, despite costs remaining under pressure due to lower wood allocation and harsh winter conditions.

Estimate Revisions

Over the last 30 days, Resolute Forest Products' earnings estimates for fiscal 2014 climbed higher on expectations of a solid earnings momentum. We also envision an uptrend for the stock backed by its strong growth potential.

Other Stocks to Consider

Stocks in the industry that warrant a look include Clearwater Paper Corporation ( CLW ), Fibria Celulose SA ( FBR ) and Rexam plc ( REXMY ), each of which carry a Zacks Rank #2 (Buy).

CLEARWATER PAPR (CLW): Free Stock Analysis Report

FIBRIA CELULOSE (FBR): Free Stock Analysis Report

REXAM PLC-ADR (REXMY): Get Free Report

RESOLUTE FOREST (RFP): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: CLW , FBR , REXMY , RFP

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