Domtar Beats on EPS but GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Domtar (NYS: UFS) reported earnings on Feb. 3. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Domtar met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue was unchanged and GAAP earnings per share contracted significantly.

Margins contracted across the board.

Revenue details
Domtar booked revenue of $1.37 billion. The six analysts polled by S&P Capital IQ looked for revenue of $1.36 billion. Sales were 0.3% lower than the prior-year quarter's $1.37 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.

EPS details
Non-GAAP EPS came in at $2.49. The 13 earnings estimates compiled by S&P Capital IQ anticipated $2.24 per share on the same basis. GAAP EPS of $1.63 for Q4 were 79% lower than the prior-year quarter's $7.59 per share.

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Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 24.1%, 160 basis points worse than the prior-year quarter. Operating margin was 10.9%, 40 basis points worse than the prior-year quarter. Net margin was 4.5%, 1,920 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.41 billion. On the bottom line, the average EPS estimate is $1.96.

Next year's average estimate for revenue is $5.59 billion. The average EPS estimate is $8.53.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 113 members out of 135 rating the stock outperform, and 22 members rating it underperform. Among 53 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 50 give Domtar a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Domtar is outperform, with an average price target of $101.46.

At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

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