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Momentum

Michael Vodicka

Clearwater Paper Corp.

CLW

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Clearwater Paper Corp. (CLW - Snapshot Report) continues to trade near its multi-year high after reporting an awesome 33% earnings surprise in late July. Estimates have since spiked higher, with the current year up 81 cents in the last month to $5.03, a bullish 229% growth projection from last year.

Company Description

Clearwater Paper Corp. manufactures and sells pulp-based products for both consumer and commercial markets in the United States and has a market cap of $722 million.

With the global economy on the mend over the last year, many companies have seen demand return to their markets as consumers and corporations regain the confidence to spend. That dynamic lifted Clearwater to better than expected Q2 results, reported on July 29, that included strong sales and earnings growth.

Second-Quarter Results

Revenue for the period was up 10% from last year to $363 million. Earnings also came in strong at $1.75, 33% ahead of the Zacks Consensus Estimate, moving its average earnings surprise to 63% over the last four quarters.

Clearwater's largest segment, Pulp and Paperboard, also saw the biggest gain, up 15% from last year to $218 million on higher volumes and a favorable pricing environment.

Balance Sheet

Clearwater levberaged the good quarter to strengthen its balance sheet, with cash and equivalents up $10 million from last year to $13 million. Its debt to equity ratio of 38% is well ahead of its peers 117.5%.

The company also announced that its planned tissue facility in Shelby, North Carolina remains on schedule. The $260 million facility is expected to produce 10 million cases of bathroom tissue annually to meet growing demand.

Estimates

Estimates took a very nice jump forward on the good quarter, with the current year adding 81 cents to $5.03. The next-year estimate is up 91 cents in the same time to $5.48, a solid 9% growth projection.

Valuation

Not only does CLW have some nice upward momentum, it also looks reasonably priced, trading with a forward P/E multiple of 12.5 against its peers 11.5X.

12-Month Chart

CLW continues to trade near its all-time high after jumping higher on the good quarter. The stochastic below the chart is signaling that shares are trading well away from over-bought territory. Look for support from the long-term trend line on any weakness, take a look below.

CLW: Clearwater Paper Corp. >
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

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