UPM-Kymmene Oyj (HLSE:UPM) - Share price, News & Analysis

Q: What is the Fair Price of UPM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

UPM (€33.4) is trading below our estimate of [[fair value]] (€47.57)

UPM fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	2/6
Past Performance	2/6
Financial Health	4/6
Dividends	4/6

UPM Stock Overview

UPM-Kymmene Oyj engages in the forest-based bio industry.

Rewards

Trading at 29.8% below our estimate of its fair value

Earnings are forecast to grow 7.66% per year

Risk Analysis

High level of non-cash earnings

Dividend of 3.89% is not well covered by earnings

UPM-Kymmene Oyj Competitors

Stora Enso Oyj

HLSE:STERV

€12.3b

Metsä Board Oyj

HLSE:METSB

€3.1b

Huhtamäki Oyj

HLSE:HUH1V

€4.0b

Kemira Oyj

HLSE:KEMIRA

€1.9b

Price History & Performance

Summary of all time highs, changes and price drops for UPM-Kymmene Oyj
Historical stock prices
Current Share Price	€33.40
52 Week High	€35.68
52 Week Low	€24.85
Beta	0.81
1 Month Change	16.42%
3 Month Change	5.43%
1 Year Change	-4.71%
3 Year Change	44.15%
5 Year Change	48.51%
Change since IPO	331.04%

Recent News & Updates

Jun 23

Here's What To Make Of UPM-Kymmene Oyj's (HEL:UPM) Decelerating Rates Of Return

If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. Firstly, we'd...

Jun 08

UPM-Kymmene Oyj's (HEL:UPM) Intrinsic Value Is Potentially 60% Above Its Share Price

Does the June share price for UPM-Kymmene Oyj ( HEL:UPM ) reflect what it's really worth? Today, we will estimate the...

Shareholder Returns

	UPM	FI Forestry	FI Market
7D	5.6%	2.6%	2.0%
1Y	-4.7%	-7.0%	-18.6%

Return vs Industry: UPM exceeded the Finnish Forestry industry which returned -6.1% over the past year.

Return vs Market: UPM exceeded the Finnish Market which returned -18.9% over the past year.

Price Volatility

Is UPM's price volatile compared to industry and market?
UPM volatility
UPM Average Weekly Movement	4.0%
Forestry Industry Average Movement	5.4%
Market Average Movement	5.0%
10% most volatile stocks in FI Market	8.8%
10% least volatile stocks in FI Market	3.3%

Stable Share Price: UPM is less volatile than 75% of Finnish stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: UPM's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1871	17,601	n/a	https://www.upm.com

UPM-Kymmene Oyj engages in the forest-based bio industry. It operates through UPM Biorefining, UPM Energy, UPM Raflatac, UPM Specialty Papers, UPM Communication Papers, UPM Plywood, and Other operations segments. The company provides softwood, birch, and eucalyptus pulp for tissue, specialty, and graphic papers and packaging; sawn timber for joinery, packaging, furniture, planning, and construction industries; and wood-based renewable diesel and renewable naphtha for the petrochemical industry.

UPM-Kymmene Oyj Fundamentals Summary

How do UPM-Kymmene Oyj's earnings and revenue compare to its market cap?
UPM fundamental statistics
Market Cap	€17.81b
Earnings (TTM)	€1.24b
Revenue (TTM)	€10.27b

14.4x

P/E Ratio

1.7x

P/S Ratio

Is UPM overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
UPM income statement (TTM)
Revenue	€10.27b
Cost of Revenue	€8.61b
Gross Profit	€1.66b
Other Expenses	€417.00m
Earnings	€1.24b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Oct 25, 2022

Earnings per share (EPS)	2.32
Gross Margin	16.13%
Net Profit Margin	12.07%
Debt/Equity Ratio	38.4%

How did UPM perform over the long term?

See historical performance and comparison

Dividends

3.9%

Current Dividend Yield

56%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is UPM undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for UPM?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for UPM. This is calculated by dividing UPM's market cap by their current preferred multiple.
What is UPM's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	€17.81b

UPM key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	2.1x
Enterprise Value/EBITDA	13.1x
PEG Ratio	1.9x

Price to Earnings Ratio vs Peers

How does UPM's PE Ratio compare to its peers?

UPM PE Ratio vs Peers

The above table shows the PE ratio for UPM vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	12.2x
STERV Stora Enso Oyj	8.1x	-10.7%	€12.3b
METSB Metsä Board Oyj	8.5x	-11.3%	€3.1b
HUH1V Huhtamäki Oyj	17.7x	6.0%	€4.0b
KEMIRA Kemira Oyj	14.6x	5.3%	€1.9b
UPM UPM-Kymmene Oyj	14.4x	7.7%	€17.8b

Price-To-Earnings vs Peers: UPM is expensive based on its Price-To-Earnings Ratio (14.4x) compared to the peer average (12.2x).

Price to Earnings Ratio vs Industry

How does UPM's PE Ratio compare vs other companies in the European Forestry Industry?

Price-To-Earnings vs Industry: UPM is expensive based on its Price-To-Earnings Ratio (14.4x) compared to the European Forestry industry average (9x)

Price to Earnings Ratio vs Fair Ratio

What is UPM's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

UPM PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	14.4x
Fair PE Ratio	16.4x

Price-To-Earnings vs Fair Ratio: UPM is good value based on its Price-To-Earnings Ratio (14.4x) compared to the estimated Fair Price-To-Earnings Ratio (16.4x).

Share Price vs Fair Value

What is the Fair Price of UPM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: UPM (€33.4) is trading below our estimate of fair value (€47.57)

Significantly Below Fair Value: UPM is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is UPM-Kymmene Oyj forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

7.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: UPM's forecast earnings growth (7.7% per year) is above the savings rate (0.2%).

Earnings vs Market: UPM's earnings (7.7% per year) are forecast to grow slower than the Finnish market (7.9% per year).

High Growth Earnings: UPM's earnings are forecast to grow, but not significantly.

Revenue vs Market: UPM's revenue (4% per year) is forecast to grow faster than the Finnish market (1.8% per year).

High Growth Revenue: UPM's revenue (4% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: UPM's Return on Equity is forecast to be low in 3 years time (12.2%).

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Past Performance

How has UPM-Kymmene Oyj performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-2.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: UPM has a high level of non-cash earnings.

Growing Profit Margin: UPM's current net profit margins (12.1%) are higher than last year (8.3%).

Past Earnings Growth Analysis

Earnings Trend: UPM's earnings have declined by 2% per year over the past 5 years.

Accelerating Growth: UPM's earnings growth over the past year (69.5%) exceeds its 5-year average (-2% per year).

Earnings vs Industry: UPM earnings growth over the past year (69.5%) underperformed the Forestry industry 86.6%.

Return on Equity

High ROE: UPM's Return on Equity (11.2%) is considered low.

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Financial Health

How is UPM-Kymmene Oyj's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: UPM's short term assets (€5.5B) exceed its short term liabilities (€2.8B).

Long Term Liabilities: UPM's short term assets (€5.5B) exceed its long term liabilities (€5.3B).

Debt to Equity History and Analysis

Debt Level: UPM's net debt to equity ratio (30.1%) is considered satisfactory.

Reducing Debt: UPM's debt to equity ratio has increased from 22% to 38.4% over the past 5 years.

Debt Coverage: UPM's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: UPM's interest payments on its debt are well covered by EBIT (81.9x coverage).

Balance Sheet

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Dividend

What is UPM-Kymmene Oyj current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.89%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: UPM's dividend (3.89%) is higher than the bottom 25% of dividend payers in the Finnish market (2.39%).

High Dividend: UPM's dividend (3.89%) is low compared to the top 25% of dividend payers in the Finnish market (4.75%).

Stability and Growth of Payments

Stable Dividend: UPM's dividends per share have been stable in the past 10 years.

Growing Dividend: UPM's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (56%), UPM's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: UPM is paying a dividend but the company has no free cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

11.6yrs

Average management tenure

CEO

UPM-Kymmene Oyj has no CEO, or we have no data on them.

Leadership Team

Experienced Management: UPM's management team is seasoned and experienced (11.6 years average tenure).

Board Members

Experienced Board: UPM's board of directors are considered experienced (4.3 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/11 00:00
End of Day Share Price	2022/08/11 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31