NYSE:UFS

Stock Analysis Report

Executive Summary

Domtar Corporation designs, manufactures, markets, and distributes various communication papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, and internationally.

Rewards

Trading at 39.2% below its fair value

Earnings are forecast to grow 6.66% per year

Became profitable this year

Risk Analysis

Unstable dividend track record

Large one-off items impacting financial results



Snowflake Analysis

Undervalued with excellent balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has Domtar's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: UFS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.9%

UFS

-0.6%

US Forestry

0.6%

US Market


1 Year Return

-0.3%

UFS

15.0%

US Forestry

20.8%

US Market

Return vs Industry: UFS underperformed the US Forestry industry which returned 15% over the past year.

Return vs Market: UFS underperformed the US Market which returned 20.8% over the past year.


Shareholder returns

UFSIndustryMarket
7 Day0.9%-0.6%0.6%
30 Day1.1%-1.3%2.5%
90 Day6.8%11.8%4.9%
1 Year4.2%-0.3%18.2%15.0%23.5%20.8%
3 Year10.6%-2.1%11.7%3.3%46.5%37.0%
5 Year12.9%-8.1%5.1%-7.0%64.6%46.5%

Price Volatility Vs. Market

How volatile is Domtar's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Domtar undervalued compared to its fair value and its price relative to the market?

39.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: UFS ($38.53) is trading below our estimate of fair value ($63.38)

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


Price To Earnings Ratio

PE vs Industry: UFS is good value based on its PE Ratio (11.8x) compared to the Forestry industry average (17.4x).

PE vs Market: UFS is good value based on its PE Ratio (11.8x) compared to the US market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: UFS is poor value based on its PEG Ratio (1.8x)


Price to Book Ratio

PB vs Industry: UFS is good value based on its PB Ratio (0.9x) compared to the US Forestry industry average (0.9x).


Next Steps

Future Growth

How is Domtar forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

6.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: UFS's forecast earnings growth (6.7% per year) is above the savings rate (1.7%).

Earnings vs Market: UFS's earnings (6.7% per year) are forecast to grow slower than the US market (14.4% per year).

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

Revenue vs Market: UFS's revenue is expected to decline over the next 3 years (-1.5% per year).

High Growth Revenue: UFS's revenue is forecast to decline over the next 3 years (-1.5% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: UFS's Return on Equity is forecast to be low in 3 years time (7%).


Next Steps

Past Performance

How has Domtar performed over the past 5 years?

-25.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: UFS has a large one-off loss of $96.0M impacting its September 30 2019 financial results.

Growing Profit Margin: UFS became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: UFS's earnings have declined by -25.8% per year over the past 5 years.

Accelerating Growth: UFS has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: UFS has become profitable in the last year, making it difficult to compare its past year earnings growth to the Forestry industry (3.7%).


Return on Equity

High ROE: UFS's Return on Equity (8.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Domtar's financial position?


Financial Position Analysis

Short Term Liabilities: UFS's short term assets ($1.6B) exceed its short term liabilities ($702.0M).

Long Term Liabilities: UFS's short term assets ($1.6B) do not cover its long term liabilities ($1.7B).


Debt to Equity History and Analysis

Debt Level: UFS's debt to equity ratio (38.1%) is considered satisfactory.

Reducing Debt: UFS's debt to equity ratio has reduced from 46.8% to 38.1% over the past 5 years.

Debt Coverage: UFS's debt is well covered by operating cash flow (53.7%).

Interest Coverage: UFS's interest payments on its debt are well covered by EBIT (8.2x coverage).


Balance Sheet

Inventory Level: UFS has a high level of physical assets or inventory.

Debt Coverage by Assets: UFS's debt is covered by short term assets (assets are 1.7x debt).


Next Steps

Dividend

What is Domtar's current dividend yield, its reliability and sustainability?

4.72%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Domtar before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company4.7%marketbottom25%1.4%markettop25%3.7%industryaverage3.3%forecastin3Years4.7%

Current dividend yield vs market & industry

Notable Dividend: UFS's dividend (4.72%) is higher than the bottom 25% of dividend payers in the US market (1.43%).

High Dividend: UFS's dividend (4.72%) is in the top 25% of dividend payers in the US market (3.71%)


Stability and Growth of Payments

Stable Dividend: UFS's dividend payments have been volatile in the past 10 years.

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (55%), UFS's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: UFS's dividends in 3 years are forecast to be well covered by earnings (48.4% payout ratio).


Next Steps

Management

What is the CEO of Domtar's salary, the management and board of directors tenure and is there insider trading?

11.8yrs

Average management tenure


CEO

John Williams (65yo)

10.9yrs

Tenure

US$7,952,638

Compensation

Mr. John D. Williams, BA, has been the Chief Executive Officer and President of Domtar Corporation since joining in January 1, 2009. Mr. Williams served as the President of the European Packaging Operation ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD7.95M) is above average for companies of similar size in the US market ($USD3.87M).

Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.


Management Age and Tenure

11.8yrs

Average Tenure

56yo

Average Age

Experienced Management: UFS's management team is seasoned and experienced (11.8 years average tenure).


Board Age and Tenure

8.9yrs

Average Tenure

65yo

Average Age

Experienced Board: UFS's board of directors are considered experienced (8.9 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUS$605,07204 Mar 19
Michael Fagan
EntityIndividual
Role
Senior Key Executive
President of Personal Care Division
Shares11,834
Max PriceUS$51.13
SellUS$2,467,30526 Feb 19
John Williams
EntityIndividual
Role
Chief Executive Officer
President
Shares47,176
Max PriceUS$52.30
SellUS$149,41521 Feb 19
Zygmunt Jablonski
EntityIndividual
Role
Chief Administrative Officer
Shares2,864
Max PriceUS$52.17
SellUS$320,22021 Feb 19
Daniel Buron
EntityIndividual
Role
Chief Financial Officer
Senior VP & CFO
Shares6,000
Max PriceUS$53.37
SellUS$580,73314 Feb 19
Michael Garcia
EntityIndividual
Role
Senior Key Executive
President of Pulp & Paper Division
Shares11,272
Max PriceUS$51.52

Ownership Breakdown

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


Management Team

  • Razvan Theodoru

    VP of Corporate Law & Corporate Secretary

    • Tenure: 0yrs
  • Patrick Loulou (50yo)

    Senior Vice-President of Corporate Development

    • Tenure: 12.8yrs
    • Compensation: US$1.21m
  • David Struhs (58yo)

    Vice-President of Corporate Services and Sustainability

    • Tenure: 0yrs
  • Daniel Buron (55yo)

    Senior VP & CFO

    • Tenure: 12.8yrs
    • Compensation: US$2.96m
  • John Williams (65yo)

    President

    • Tenure: 10.9yrs
    • Compensation: US$7.95m
  • Michael Fagan (57yo)

    President of Personal Care Division

    • Tenure: 0yrs
    • Compensation: US$2.07m
  • Paola Farnesi (52yo)

    VP & Treasurer

    • Tenure: 11.8yrs
  • Zygmunt Jablonski (65yo)

    • Tenure: 0yrs
    • Compensation: US$2.13m
  • Mike Garcia (54yo)

    President of Pulp & Paper Division

    • Tenure: 5.6yrs
    • Compensation: US$2.67m
  • Nicholas Estrela

    Director of Investor Relations

    • Tenure: 0yrs

Board Members

  • David Maffucci (68yo)

    Independent Non-Executive Director

    • Tenure: 8.9yrs
    • Compensation: US$278.14k
  • Pamela Strobel (67yo)

    Independent Non-Executive Director

    • Tenure: 12.9yrs
    • Compensation: US$303.51k
  • Brian Levitt (71yo)

    Independent Non-Executive Director

    • Tenure: 12.9yrs
    • Compensation: US$309.16k
  • Mary Winston (57yo)

    Independent Non-Executive Director

    • Tenure: 4yrs
    • Compensation: US$236.83k
  • Denis Turcotte (57yo)

    Independent Non-Executive Director

    • Tenure: 12.9yrs
    • Compensation: US$301.46k
  • Dave Illingworth (65yo)

    Independent Non-Executive Director

    • Tenure: 6.2yrs
    • Compensation: US$254.39k
  • John Williams (65yo)

    President

    • Tenure: 10.9yrs
    • Compensation: US$7.95m
  • Robert Apple (69yo)

    Independent Chairman of the Board

    • Tenure: 2.6yrs
    • Compensation: US$394.84k
  • Giannella Alvarez (59yo)

    Independent Non-Executive Director

    • Tenure: 7.9yrs
    • Compensation: US$247.53k

Company Information

Domtar Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Domtar Corporation
  • Ticker: UFS
  • Exchange: NYSE
  • Founded: 1848
  • Industry: Paper Products
  • Sector: Materials
  • Market Cap: US$2.207b
  • Shares outstanding: 57.27m
  • Website: https://www.domtar.com

Number of Employees


Location

  • Domtar Corporation
  • 234 Kingsley Park Drive
  • Fort Mill
  • South Carolina
  • 29715
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
G2K1DB (Deutsche Boerse AG)YesCommon StockDEEURMar 2007
UFSTSX (The Toronto Stock Exchange)YesCommon StockCACADMar 2007
UFSNYSE (New York Stock Exchange)YesCommon StockUSUSDMar 2007

Biography

Domtar Corporation designs, manufactures, markets, and distributes various communication papers, specialty and packaging papers, and absorbent hygiene products in the United States, Canada, Europe, Asia, a ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/14 00:15
End of Day Share Price2019/12/13 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.