RFP - Embedded Expectations Analysis - 2020 06 24
Resolute Forest Products Inc. (RFP:USA) currently trades at a discount to UAFRS-based(Uniform) assets, with a 0.5x Uniform P/B. At these levels, the market has expectations
for profitability to inflect positively, but management may be concerned about their product demand, capacity adjustments, and market uncertainty
Specifically, management may have concerns about declines in demand for uncoated mechanical papers and North American newsprint and the sustainability of demand in the repair and remodeling (R&R) segment. In addition, they may lack confidence in their ability to ramp manufacturing of key products, including bath tissue and paper towels, adjust their capacity based on changing conditions, and mitigate delivered cost declines. Furthermore, management may have concerns about declines in away-from-home spending, their world newsprint shipment-to-capacity ratio, and their quarterly net losses. Finally, they may be downplaying concerns about the impact of housing start uncertainty, and they may lack confidence in their ability to maintain softwood lumber duty deposits and pension plan contributions
Resolute Forest Products is engaged in the forest products industry, with a range of products, including market pulp, tissue, wood products, newsprint and specialty papers. The company's segments are: Market pulp, which includes virgin pulp and recycled bleached kraft pulp; Tissue, which manufactures a range of tissue products for the away-from-home and at-home markets; Wood products, which produce dimension spruce-pine-fir lumber and provides wood chips to its pulp and paper mills in Canada; Newsprint, which sells newsprint; and Specialty papers, which composed of uncoated mechanical papers, including supercalendered paper and white paper, as well as uncoated freesheet papers.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.