Demand for specialty wood pulp products remains strong. Buckeye Technologies Inc. ( BKI - Snapshot Report ) recently reported record quarterly earnings yet it remains a value stock with a forward P/E of just 13.

Buckeye manufactures specialty fibers and nonwoven materials. Headquartered in Memphis, it is the only manufacturer in the world providing cellulose-based specialty products made from both wood and cotton.

Specialty cellulose commands higher prices, in general, and demand for it is less cyclical than commodity cellulose.

It has manufacturing facilities in North America, Germany and Brazil. Its products are used to manufacture many different products from rayon industrial cord, to plastics as well as thickeners for personal care products, food and drugs.

The company's customized fibers can be found on premium letter head, currencies, personal stationary as well as automotive air and oil filters. Its nonwoven materials are used in household cleaning products, wipes, table top items and food pads.

Revenue Jumped 14.3% in the Fiscal Second Quarter

On Jan 25, Buckeye announced its fiscal second quarter results and saw revenue jump to $209.5 from $183.3 million in the year ago quarter primarily due to higher selling prices and improved mix. Shipment volume, however, did decline 4% as the company finished rebuilding inventories at its Foley mill and specialty cotton fibers shipments were negatively impacted by limited availability and high prices of cotton linters.

It beat the Zacks Consensus Estimate by 19.1% as earnings per share were a record 50 cents compared to the consensus of 42 cents. It made just 22 cents a year ago. The increase was due to higher selling prices in the specialty fibers segment and reduced interest expense.

Outlook for the Second Half

Buckeye saw continued improvement both year over year and quarter over quarter. It expects the trend to continue into the second half of fiscal 2011.

The company sees demand for specialty wood pulp remaining strong and average selling prices rose 17% on Jan 1 compared to the fiscal second quarter average and were up more than 20% from last year's prices. Fluff pulp prices also remain at high levels.

Buckeye expects nonwoven sales and earnings to improve over the seasonally weak second quarter on increased shipments and selling prices and stable fluff pulp prices.

Dividend Raised by 25%

Cash flow has improved the last few quarters. In the fiscal second quarter, long-term debt was reduced by $1 million. The company also expects to reduce long-term debt to about $100 million by the end of the fiscal year, which would be the lowest in the company's history.

Given that news, the company decided to reward the shareholders.

On Jan 25, Buckeye announced it was increasing its quarterly cash dividend to 5 cents per share from 4 cents per share due to a positive forward outlook. It had been paying the 4 cent per share dividend since August 2010.

That is a current dividend yield of 0.8%.

Zacks Consensus Estimates Jump

Given the big beat in the fiscal second quarter and the improving conditions for the second half of the fiscal year, analysts scrambled to raise both fiscal 2011 and 2012 estimates.

The fiscal 2011 Zacks Consensus Estimate jumped 29 cents to $1.98 per share in the last 7 days. That is earnings growth of 124.6%.

Earnings growth is expected to continue into fiscal 2012, with earnings projected to grow another 22.2% to $2.42 per share.

Shares Are at Multi-Year Highs

Shares of Buckeye have been on a tear in the last year, rising 113% in that time. Shares are now at 5-year highs.

But even with the surging share price, Buckeye still has value.

Not only does it have the low P/E ratio which is within the value parameters at under 15, it also has a price-to-book ratio of just 1.9.

Buckeye Technologies is a Zacks #1 Rank (strong buy) stock.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.