Clearwater Paper Hits 52-Week High, Buoyed by Improved Q2

Buoyed by improved second-quarter 2014 results, shares of Clearwater Paper Corporation CLW scaled a 52-week high of $70.16 during Friday's trading session, before closing at $68.38. This translates to a healthy year-to-date return of 43.3%.

Clearwater Paper's share price has been on an uptrend since it reported the second quarter results. Despite its price appreciation, Clearwater Paper still has the wherewithal for the stock to climb up. The stock is currently trading at a forward P/E of 18.5x and has long-term earnings growth expectation of 5.0%.

Growth Drivers

Clearwater Paper reported quarterly sales of $498.8 million – up 5.9% year over year with record TAD (through-air-dried) product sales, driven by strong customer momentum and continued demand for paperboard products. Anchored by continued success in the core businesses and healthy progress in niche market areas, GAAP earnings also improved year over year.  

Adjusted earnings of 74 cents per share comfortably beat the Zacks Consensus Estimate by 6 cents and the year-ago tally by 23 cents. Adjusted EBITDA for the quarter was up 8.4% to $57.3 million.

Clearwater Paper looks well positioned to capitalize on opportunities in growing markets through both organic and inorganic means. With a strong balance sheet, healthy cash flow and effective management, the company appears poised to exploit value-added opportunities to bolster its prospects.

The solid fundamentals also find confirmation in positive estimate changes, driving the Zacks Consensus Estimate higher for both the current quarter as well as the year. The Zacks Consensus Estimates for the ongoing quarter and year are currently pegged at $1.16 and $3.69, respectively, representing 314.3% and 101.6% year-over-year growth.

Other Stocks to Consider

Clearwater Paper currently has a Zacks Rank #3 (Hold). Other players in the industry worth mentioning include Neenah Paper, Inc. NP, Orchids Paper Products Co. TIS and Mercer International Inc. MERC, each carrying a Zacks Rank #2 (Buy).

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