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Neenah Paper (NP - Snapshot Report) crushed fourth-quarter EPS estimates by 15 cents, or 79%, and management was more optimistic about 2010.

Company Description

Neenah Paper manufactures and distributes a wide range of premium and specialty paper grades, with well-known brands such as Classic, Environment, Kimdura, and Munising. The company also produces and sells bleached pulp, primarily for use in the manufacture of tissue and writing papers.

The Zacks Rank #1 stock has a dividend yield of 2.1%.

Business Is Improving

Recently, management indicated that its businesses continue to gain momentum with a fourth sequential quarterly increase in sales, EBIT, and margins. The company has been able to maintain cost reduction efforts and increase selling prices.

Additionally, the company is using its cash flow to pay down debt.

Neenah Paper's improved results and balance sheet caught the attention of Moody's (MCO), which placed all of its ratings on Neenah Paper on review for possible upgrades. If Moody's upgrades Neenah Paper's debt ratings, its borrowing will decrease.

Analyst Estimates

Analysts covering Neenah Paper have good reason to be bullish on the stock. In the last four quarters, Neenah Paper has beaten the Zacks Consensus by an average of 145%.

In the 60 days, the Zacks Consensus Estimate for 2010 is up 27 cents, or 29.0%, while the Zacks Consensus for 2011 is higher by 6 cents, or 4.0%.

In addition, analysts expect Neenah Paper to deliver strong earnings growth for the next few years. Analyst estimate NP will have EPS growth of 58.3% in 2010 and 29.6% in 2011. The average estimate for long-term EPS growth is 12.5%.

Read the March 3 commentary on Neenah Paper.

Last Week's Growth and Income Zacks Rank Buys

MSC Industrial (MSM) reported better-than-expected results for the second quarter, and management guided higher for the third quarter. Our previous article is here.

The Buckle (BKE) is a Zacks #2 Rank stock. Analysts expected the company to grow its EPS at 12.0% per year for the next 3 to 5 years. It also has a current dividend yield of 2.1%. For more details, click here.

WD-40 (WDFC) this Zacks #1 Rank stock continues to see upward estimate revisions. In the last seven days, the Zacks Consensus is 3.6% for 2010 and 3.8% for 2011. Click here to read more.

Plum Creek Timber (PCL) is expected to grow its earnings per share at 10% per year for the next 3 to 5 years. The stock also offers investors a fat dividend yield of 4.2%. Read the article here.

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