Skip to main content

Clearwater Paper Corp(CLW-N)

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Why Clearwater Paper's Stock Plunged

Motley Fool - Tue Nov 1, 2022

What happened

Shares of Clearwater Paper Corporation(NYSE: CLW) fell as much as 19% in trading on Tuesday after reporting third-quarter 2022 financial results. The stock closed down 16.7% on the day.

So what

Revenue was up 20% in the quarter to $539 million, and net income was $21 million, or $1.21 per share. Revenue was slightly above estimates, and adjusted earnings per share (which pulls out one-time items) of $1.83 per share was well over the $1.52 that analysts expected.

The outlook for the fourth quarter was a little more muted. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) is expected to be $38 million to $48 million, below the $77 million in the third quarter, on higher costs and lower volumes, due to seasonality.

Now what

The market's reaction wasn't positive but there's a lot to like in this earnings report. Management has paid down $73.3 million in debt so far this year and cash on hand has doubled to $50.8 million.

Clearwater Paper is a very profitable business. With an improving balance sheet and a market cap of just $621 million, it's a great value for investors.

In fact, the enterprise value of the company, compared to the expected 2022 EBITDA of $237 million to $247 million, is just five times the low end of the range. That's a great value. If management can continue churning out cash and returning it to shareholders, this should be a great stock to buy and hold.

10 stocks we like better than Clearwater Paper
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Clearwater Paper wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 30, 2022

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.