How the Wheels Came Off Domtar's Bus

Seth Jayson, The Motley Fool
Updated

Domtar (NYS: UFS) reported earnings on May 4. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended March 31 (Q1), Domtar met expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue shrank slightly and GAAP earnings per share shrank significantly.


Margins dropped across the board.

Revenue details
 Domtar tallied revenue of $1.40 billion. The five analysts polled by S&P Capital IQ hoped for net sales of $1.40 billion on the same basis. GAAP reported sales were 1.8% lower than the prior-year quarter's $1.42 billion.

anImage
anImage

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
 EPS came in at $1.65. The 11 earnings estimates compiled by S&P Capital IQ averaged $1.99 per share. GAAP EPS of $0.76 for Q1 were 76% lower than the prior-year quarter's $3.14 per share.

anImage
anImage

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
 For the quarter, gross margin was 22.2%, 610 basis points worse than the prior-year quarter. Operating margin was 8.2%, 710 basis points worse than the prior-year quarter. Net margin was 2.0%, 730 basis points worse than the prior-year quarter.

Looking ahead
 Next quarter's average estimate for revenue is $1.44 billion. On the bottom line, the average EPS estimate is $1.90.

Next year's average estimate for revenue is $5.69 billion. The average EPS estimate is $8.32.

Investor sentiment
 The stock has a three-star rating (out of five) at Motley Fool CAPS, with 111 members out of 134 rating the stock outperform, and 23 members rating it underperform. Among 41 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 36 give Domtar a green thumbs-up, and five 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 $108.54.

Can your portfolio provide you with enough income to last through retirement? You'll need more than Domtar. Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks." Click here for instant access to this free report.

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.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Advertisement