Sylvamo (NYSE:SLVM) Posts Quarterly Earnings Results, Beats Estimates By $0.01 EPS

Key Points

• Sylvamo beat quarterly EPS estimates, reporting $0.03 versus the $0.02 consensus, while revenue rose 1.5% year over year to $806 million but fell short of the $811.25 million estimate.
• Adjusted EBITDA more than doubled sequentially to $60 million, and management expects a stronger second half supported by improved pricing and mix, lower costs, stronger Latin American demand, and working-capital recovery.
• Despite the improved outlook, North American volumes may decline because of supply disruptions, while weak European margins could prompt Sylvamo to consider further investment, a closure, or a sale; shares rose 8.6% after the results.

Sylvamo (NYSE:SLVM - Get Free Report) issued its earnings results on Friday. The company reported $0.03 earnings per share for the quarter, topping the consensus estimate of $0.02 by $0.01, FiscalAI reports. Sylvamo had a return on equity of 9.79% and a net margin of 3.11%.The business had revenue of $806.00 million for the quarter, compared to analysts' expectations of $811.25 million. During the same period in the previous year, the firm posted $0.37 EPS. The business's revenue for the quarter was up 1.5% compared to the same quarter last year.

Here are the key takeaways from Sylvamo's conference call:

• Adjusted EBITDA more than doubled sequentially to $60 million in Q2, driven primarily by paper price increases, improved mix, lower operating costs, and European green-energy credits.
• Management expects a stronger second half, including a projected $75 million-$85 million improvement in price and mix versus the first half, seasonally stronger Latin American demand, lower fiber costs, and the reversal of much of the working-capital build.
• North American volumes are expected to decline in the second half because of the Riverdale supply loss, an Eastover outage extending beyond the planned 45 days, and reduced imports from Brazil following tariff changes.
• Eastover investments remain on schedule and on budget, with the paper-machine speed-up and new sheeter expected to deliver approximately $50 million in annual benefits; including the warehouse expansion, the projects are expected to generate about $55 million annually.
• European operations continue to face difficult industry conditions and unacceptable margins. Although cost and mix improvements are underway, management said it may consider alternatives such as further investment, closure, or a sale if the outlook is not satisfactory, potentially in 2027.

Sylvamo Trading Up 8.6%

Shares of Sylvamo stock traded up $3.26 on Friday, reaching $41.04. The company had a trading volume of 405,522 shares, compared to its average volume of 286,172. The firm's 50 day moving average price is $38.85 and its two-hundred day moving average price is $42.22. The company has a debt-to-equity ratio of 0.78, a quick ratio of 0.81 and a current ratio of 1.45. Sylvamo has a 52-week low of $35.53 and a 52-week high of $56.80. The firm has a market cap of $1.63 billion, a PE ratio of 16.22, a PEG ratio of 0.93 and a beta of 0.87.

Sylvamo Dividend Announcement

The business also recently declared a quarterly dividend, which was paid on Tuesday, July 28th. Stockholders of record on Tuesday, July 7th were paid a $0.45 dividend. This represents a $1.80 dividend on an annualized basis and a dividend yield of 4.4%. The ex-dividend date of this dividend was Tuesday, July 7th. Sylvamo's payout ratio is 71.15%.

Wall Street Analyst Weigh In

A number of equities analysts have weighed in on the company. Weiss Ratings lowered Sylvamo from a "hold (c-)" rating to a "sell (d+)" rating in a research note on Monday, May 11th. Royal Bank Of Canada cut their target price on Sylvamo from $49.00 to $46.00 and set a "sector perform" rating for the company in a research note on Friday, July 17th. Truist Financial lowered their price target on shares of Sylvamo from $54.00 to $51.00 and set a "buy" rating on the stock in a research report on Wednesday, July 15th. Zacks Research cut shares of Sylvamo from a "hold" rating to a "strong sell" rating in a research report on Tuesday, July 14th. Finally, Wall Street Zen raised shares of Sylvamo from a "sell" rating to a "hold" rating in a research note on Sunday, August 2nd. One investment analyst has rated the stock with a Buy rating, two have assigned a Hold rating and two have assigned a Sell rating to the company. Based on data from MarketBeat, the stock has an average rating of "Reduce" and an average target price of $47.33.

Insider Buying and Selling at Sylvamo

In related news, Director Lizanne M. Bruce sold 1,230 shares of Sylvamo stock in a transaction that occurred on Monday, June 15th. The shares were sold at an average price of $41.70, for a total value of $51,291.00. Following the completion of the sale, the director owned 14,475 shares in the company, valued at approximately $603,607.50. This trade represents a 7.83% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is accessible through this link. Insiders own 0.81% of the company's stock.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently modified their holdings of SLVM. UMB Bank n.a. raised its holdings in shares of Sylvamo by 171.2% in the 4th quarter. UMB Bank n.a. now owns 564 shares of the company's stock valued at $27,000 after buying an additional 356 shares during the period. Advisory Services Network LLC purchased a new position in Sylvamo during the 3rd quarter valued at about $38,000. EverSource Wealth Advisors LLC boosted its holdings in Sylvamo by 185.5% during the 2nd quarter. EverSource Wealth Advisors LLC now owns 982 shares of the company's stock valued at $49,000 after acquiring an additional 638 shares during the period. Smartleaf Asset Management LLC grew its position in Sylvamo by 83.2% in the 4th quarter. Smartleaf Asset Management LLC now owns 1,275 shares of the company's stock valued at $62,000 after acquiring an additional 579 shares in the last quarter. Finally, Virtus Investment Advisers LLC purchased a new stake in Sylvamo during the fourth quarter worth about $160,000. 91.16% of the stock is currently owned by hedge funds and other institutional investors.

Sylvamo Company Profile

Sylvamo Corporation, trading on the New York Stock Exchange under the ticker SLVM, is a leading global producer of uncoated freesheet paper. The company was established in October 2021 through a spin-off from International Paper, creating an independent entity focused exclusively on the development, manufacturing and marketing of high-quality uncoated paper products. Headquartered in Memphis, Tennessee, Sylvamo draws on decades of industry experience inherited from its predecessor, positioning itself to meet evolving customer needs in paper-based communications and packaging applications.

The company’s core product portfolio includes office and digital print papers, direct mail and marketing materials, catalog and commercial printing papers, and a range of specialty and value-added grades.

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