On Dec 24, Zacks Investment Research downgraded
), manufacturer of consumer packaging products, to a Zacks Rank
#5 (Strong Sell).
KAPSTONE PAPER (KS): Free Stock Analysis
ROCK-TENN CO (RKT): Free Stock Analysis
ORCHIDS PAPER (TIS): Free Stock Analysis
DOMTAR CORP (UFS): Free Stock Analysis Report
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Why the Downgrade?
On Nov 4, Rock-Tenn reported record earnings per share of $2.66
in the fourth quarter 2013, up 91% year over year. Despite record
earnings, the company's earnings estimate underwent sharp
downward revisions due to a tempered volume outlook and concerns
regarding the negative impact of cost headwinds.
Domestic Old Corrugated Containers (OCC) prices were flat in
October with the previous month. Export prices increased by up to
$10 per ton, depending on the grade. Rock-Tenn expects continued
price moderation during the December quarter.
Industry shipments of containerboard to export markets in the
fourth quarter declined 9% from the prior-year quarter. The
Corrugated Packaging segment's shipment also decreased 34,000
tons from the year-ago quarter due to lower domestic sales.
Rock-Tenn will reduce its current mill production to meet current
customer demand at several of its other facilities, and is
expected to increase production back to normal levels banking on
improving customer demand.
The company has scheduled major maintenance outages at its
Florence and Fernandina Beach mills in the December quarter. This
will impact results in the next quarter.
Following the fourth quarter earnings announcement, the Zacks
Consensus Estimate for 2014 has gone down 10.7% to $8.41 per
share. Likewise, the Zacks Consensus Estimate for 2015 fell 8% to
Other Stocks to Consider
Better-ranked stocks in the paper and packaging industry include
KapStone Paper and Packaging Corp.
Orchids Paper Products Co.
). While Domtar sports a Zacks Rank #1 (Strong Buy), KapStone
Paper and Orchids Paper Products have a Zacks Rank #2 (Buy).