Domtar (UFS) Shares Gap Down After Earnings Miss

Domtar Corp (NYSE:UFS) (TSE:UFS)’s share price gapped down before the market opened on Friday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $40.88, but opened at $42.57. Domtar shares last traded at $42.94, with a volume of 800324 shares trading hands.

The basic materials company reported $0.64 earnings per share for the quarter, missing analysts’ consensus estimates of $0.69 by ($0.05). Domtar had a net margin of 3.44% and a return on equity of 6.17%. The company had revenue of $1.34 billion during the quarter, compared to analyst estimates of $1.31 billion. During the same quarter in the previous year, the business posted $0.75 earnings per share. The company’s revenue for the quarter was up 4.9% on a year-over-year basis.

The business also recently declared a quarterly dividend, which will be paid on Monday, April 16th. Stockholders of record on Monday, April 2nd will be paid a $0.435 dividend. This is an increase from Domtar’s previous quarterly dividend of $0.42. This represents a $1.74 dividend on an annualized basis and a dividend yield of 4.00%. The ex-dividend date is Thursday, March 29th. Domtar’s dividend payout ratio (DPR) is presently 59.50%.

UFS has been the topic of a number of research analyst reports. Zacks Investment Research downgraded shares of Domtar from a “strong-buy” rating to a “hold” rating in a research note on Tuesday, October 17th. Stephens initiated coverage on shares of Domtar in a research note on Tuesday, October 24th. They issued an “equal weight” rating and a $43.00 price target on the stock. KeyCorp set a $33.00 price target on shares of Domtar and gave the company a “sell” rating in a research note on Friday, October 27th. DA Davidson raised their price target on shares of Domtar to $37.00 and gave the company an “underperform” rating in a research note on Monday, October 30th. Finally, Scotiabank set a $41.00 price target on shares of Domtar and gave the company a “sector perform” rating in a research note on Monday, October 30th. Three analysts have rated the stock with a sell rating, eight have assigned a hold rating and seven have issued a buy rating to the stock. The stock presently has an average rating of “Hold” and a consensus target price of $44.33.

Hedge funds and other institutional investors have recently modified their holdings of the stock. Meeder Asset Management Inc. raised its holdings in Domtar by 138.5% in the 4th quarter. Meeder Asset Management Inc. now owns 2,459 shares of the basic materials company’s stock valued at $121,000 after buying an additional 1,428 shares during the last quarter. Cubist Systematic Strategies LLC raised its holdings in Domtar by 176.1% in the 3rd quarter. Cubist Systematic Strategies LLC now owns 2,905 shares of the basic materials company’s stock valued at $126,000 after buying an additional 1,853 shares during the last quarter. Zurcher Kantonalbank Zurich Cantonalbank raised its holdings in Domtar by 41.0% in the 4th quarter. Zurcher Kantonalbank Zurich Cantonalbank now owns 3,680 shares of the basic materials company’s stock valued at $182,000 after buying an additional 1,070 shares during the last quarter. Tower Research Capital LLC TRC raised its holdings in Domtar by 1,493.5% in the 4th quarter. Tower Research Capital LLC TRC now owns 3,187 shares of the basic materials company’s stock valued at $199,000 after buying an additional 2,987 shares during the last quarter. Finally, Shelton Capital Management bought a new position in Domtar in the 3rd quarter valued at approximately $206,000. Institutional investors and hedge funds own 90.61% of the company’s stock.

The company has a quick ratio of 1.20, a current ratio of 2.29 and a debt-to-equity ratio of 0.40. The stock has a market cap of $3,046.29, a price-to-earnings ratio of 15.58, a PEG ratio of 3.25 and a beta of 1.56.

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About Domtar

Domtar Corporation designs, manufactures, markets and distributes a range of fiber-based products, including communication papers, specialty and packaging papers and absorbent hygiene products. The Company segments include Pulp and Paper and Personal Care. The Pulp and Paper segment consists of the design, manufacturing, marketing and distribution of communication, specialty and packaging papers, as well as softwood, fluff and hardwood market pulp.

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