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Domtar (UFS) Grows on Margin-Improvement Plan, Price Hikes
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On Nov 15, we issued an updated research report on Domtar Corporation . The company’s performance will be driven by focus on cost savings, margin-improvement plan and price increases. Its balanced capital-deployment approach also remains a tailwind.
Let’s illustrate these factors in detail.
Margin Improvement Plan to Spur Growth
On Nov 1, Domtar announced a margin-improvement plan within the Personal Care Division. As part of this plan, the company’s board of directors approved the permanent closure of its Waco, TX Personal Care manufacturing and distribution facility, the relocation of certain of its manufacturing assets, and a workforce reduction of approximately 214 employees across the division.
The Waco facility is expected to cease operations in third-quarter 2019. The company expects to realize annual benefit of approximately $25-$30 million from the plan.
Cost Savings to Aid Q4 Results
For fourth-quarter 2018, Domtar expects lower maintenance costs and recently-announced price increases to aid the Pulp and Paper segment’s results. Domtar will also benefit from its focus on cost savings, reduced overhead spending and customer portfolio-transition efforts.
Price Increases Supports Domtar
Domtar expects to witness positive market conditions for the Paper business. The company implemented price hikes this year and expects to fully realize the recent $50 per ton September price increase within the next three months. In the Pulp business, Domtar performed well in recent years, driven by price increases and a solid operational performance. In third-quarter 2018, prices were $23 per metric ton higher on a sequential basis.
In addition, the company announced and continues to implement price increases across several softwood and fluff pulp grades. The company also expects softwood prices to remain relatively stable in the current quarter and through 2019, supported by cyclical-demand growth and a deceleration of capacity expansion.
Share Price Performance
Shares of Domtar have lost around 2% over the past year, while the industry recorded a loss of around 10%.
Zacks Rank & Other Stocks to Consider
Domtar currently flaunts a Zacks Rank #1 (Strong Buy).
CF Industries has a long-term earnings growth rate of 6%. The stock has gained around 29% in a year’s time.
Methanex has a long-term earnings growth rate of 15%. The company’s shares have been up 21% during the past year.
The Mosaic Company has a long-term earnings growth rate of 7%. Its shares have surged 61% in the past year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Domtar (UFS) Grows on Margin-Improvement Plan, Price Hikes
On Nov 15, we issued an updated research report on Domtar Corporation . The company’s performance will be driven by focus on cost savings, margin-improvement plan and price increases. Its balanced capital-deployment approach also remains a tailwind.
Let’s illustrate these factors in detail.
Margin Improvement Plan to Spur Growth
On Nov 1, Domtar announced a margin-improvement plan within the Personal Care Division. As part of this plan, the company’s board of directors approved the permanent closure of its Waco, TX Personal Care manufacturing and distribution facility, the relocation of certain of its manufacturing assets, and a workforce reduction of approximately 214 employees across the division.
The Waco facility is expected to cease operations in third-quarter 2019. The company expects to realize annual benefit of approximately $25-$30 million from the plan.
Cost Savings to Aid Q4 Results
For fourth-quarter 2018, Domtar expects lower maintenance costs and recently-announced price increases to aid the Pulp and Paper segment’s results. Domtar will also benefit from its focus on cost savings, reduced overhead spending and customer portfolio-transition efforts.
Price Increases Supports Domtar
Domtar expects to witness positive market conditions for the Paper business. The company implemented price hikes this year and expects to fully realize the recent $50 per ton September price increase within the next three months. In the Pulp business, Domtar performed well in recent years, driven by price increases and a solid operational performance. In third-quarter 2018, prices were $23 per metric ton higher on a sequential basis.
In addition, the company announced and continues to implement price increases across several softwood and fluff pulp grades. The company also expects softwood prices to remain relatively stable in the current quarter and through 2019, supported by cyclical-demand growth and a deceleration of capacity expansion.
Share Price Performance
Shares of Domtar have lost around 2% over the past year, while the industry recorded a loss of around 10%.
Zacks Rank & Other Stocks to Consider
Domtar currently flaunts a Zacks Rank #1 (Strong Buy).
Some other top-ranked stocks in the basic materials space are CF Industries Holdings, Inc. (CF - Free Report) , Methanex Corporation (MEOH - Free Report) and The Mosaic Company (MOS - Free Report) . All these stocks sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has a long-term earnings growth rate of 6%. The stock has gained around 29% in a year’s time.
Methanex has a long-term earnings growth rate of 15%. The company’s shares have been up 21% during the past year.
The Mosaic Company has a long-term earnings growth rate of 7%. Its shares have surged 61% in the past year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>