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Domtar (UFS) Closes Home Delivery Incontinent Supplies Buy


Trades from $3

Domtar Corporation (UFS - Analyst Report) , a leading fiber-based technology company, recently completed the acquisition of privately-held Home Delivery Incontinent Supplies Co., announced in August. The strategic acquisition will expand the Personal Care segment of Domtar with complementary products.

The acquired firm is a premier direct-to-consumer provider of adult incontinence and related products, operating across the country. Headquartered in Olivette, MO, it operates through a 200,000 square foot distribution center and two retail locations in Texarkana, AR and Daytona Beach, FL. The company has approximately 240 employees and recorded $65 million revenues in 2015.

On its part, Domtar’s Personal Care segment manufactures and sells a wide range of incontinence solutions for adults, children and infants under leading brands like ATTENDS, ATTENDS DISCREET and COMFEES. The acquisition will facilitate the company to strengthen its position in the market.

In June, Domtar acquired a similar company to augment its Personal Care segment, when it purchased the assets of Butterfly Health Inc. for an undisclosed amount. Headquartered in Los Gatos, CA, Butterfly Health is a small consumer packaged goods company that is focused on health and wellness. The company offers body liners for accidental bowel leakage which is common in many heath conditions. The company provides discreet personal hygiene products for both women and men.

Such opportune acquisitions will enable Domtar to expand its geographical footprint, while strengthening its top-line growth.

Headquartered in Montreal, Canada, Domtar has a unique expertise in transforming raw materials into products to suit customer requirements. It is currently seeking growth through profitable investment opportunities with a commitment to pollution-free environment and sustainable practices. The company is also streamlining the cost structure, improving revenue quality and maintaining a healthy cash flow with a disciplined approach to cash utilization.

We remain encouraged by the inherent growth potential of this Zacks Rank #2 (Buy) stock. Other favorably ranked stocks in the industry include Fibria Celulose S.A. (FBR - Snapshot Report) , International Paper Company (IP - Analyst Report) and KapStone Paper and Packaging Corporation (KS - Snapshot Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fibria has an average positive earnings surprise of 24.6% in the trailing four quarters, beating estimates on three occasions.

International Paper has a long-term earnings growth expectation of 9.5% and is currently trading at a forward P/E of 13.7x. Neenah has a positive earnings surprise history with an average of 8.9% in the trailing four quarters, comprehensively beating estimates in each quarter.

KapStone has a long-term earnings growth expectation of 6.1% and is currently trading at a forward P/E of 16.2x.

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