KapStone Paper and Packaging Earnings Preview

Motley Fool Staff
Updated

Investors are bracing for the worst and waiting to see whether KapStone Paper and Packaging (NYS: KS) will fall short of Wall Street forecasts for the fifth consecutive quarter. The company will unveil its latest earnings on Wednesday, Aug. 3. KapStone Paper and Packaging produces and sells a variety of unbleached kraft paper, linerboard, folding carton board, saturating kraft, inflatable dunnage bags, and dimensional lumber.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back KapStone, with three of five rating it a buy and the remainder rating it a hold. Analysts don't like KapStone as much as competitor Boise overall. KapStone's rating hasn't changed over the past three months.

  • Revenue forecasts: On average, analysts predict $210.7 million in revenue this quarter. That would represent a rise of 5.8% from the year-ago quarter.

  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.36 per share. Estimates range from $0.32 to $0.47.

What our community says:
CAPS All-Stars are solidly behind the stock, with 97.6% assigning it an "outperform" rating. The community at large agrees with the All-Stars, with 93.4% giving it a rating of "outperform." The message boards have been quiet lately, with only 41 posts in the past 30 days. Even with a robust four out of five stars, KapStone's CAPS rating falls a little short of the community's upbeat outlook.

Management:
KapStone's profit has risen year over year by an average of 19.3%. The company boosted its gross margin by 4.8 percentage points in the last quarter. Revenue rose 17.1% while cost of sales rose 9.5% to $142.7 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q1

Q4

Q3

Q2

Gross Margin

31%

26.8%

31.5%

26.3%

Operating Margin

12.3%

8.8%

12.8%

6.3%

Net Margin

7.3%

6.6%

18.5%

3.6%

One final thing: If you want to keep tabs on KapStone Paper and Packaging's movements, and for more analysis on the company, make sure you add it to your Watchlist.

At the time thisarticle was published Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement