Clearwater Paper (CLW) AI Stock Analysis

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Clearwater Paper

(NYSE:CLW)

58Neutral

Clearwater Paper's overall score reflects a complex picture. The company demonstrates strengths in profitability and strategic restructuring, yet faces challenges with declining revenue and cash flow issues. Technical indicators suggest bearish sentiment, and valuation metrics are unfavorable. Despite these challenges, strategic initiatives and cost-saving measures present potential for future improvement.

Clearwater Paper (CLW) vs. S&P 500 (SPY)

Market Cap

$405.70M

Dividend YieldN/A

Average Volume (3M)286.29K

Price to Earnings (P/E)33.7

Beta (1Y)0.44

Revenue Growth-10.55%

EPS Growth-203.13%

CountryUS

Employees2,200

SectorBasic Materials

Sector Strength60

IndustryPaper, Lumber & Forest Products

Share Statistics

EPS (TTM)-6.64

Shares Outstanding16,195,679

10 Day Avg. Volume382,090

30 Day Avg. Volume286,292

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.40

Price to Cash Flow (P/CF)-2.80

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$37.00

Price Target Upside50.84% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Clearwater Paper Business Overview & Revenue Model

Company DescriptionClearwater Paper Corporation (CLW) is a leading manufacturer and supplier of private label tissue and bleached paperboard products. Headquartered in Spokane, Washington, the company operates through two primary segments: Consumer Products and Pulp and Paperboard. Clearwater Paper's Consumer Products segment focuses on producing private label tissue products, including paper towels, bathroom tissue, napkins, and facial tissue, for major retail chains. The Pulp and Paperboard segment provides bleached paperboard for a variety of applications, including packaging for consumer products, food service, and containerboard.

How the Company Makes MoneyClearwater Paper makes money primarily through the production and sale of its tissue and paperboard products. The Consumer Products segment generates revenue by manufacturing and distributing private label tissue products to retail customers, who then sell these under their own brand names. This segment benefits from long-term supply agreements with major retail chains, ensuring a steady revenue stream. The Pulp and Paperboard segment earns revenue by selling bleached paperboard to packaging manufacturers and converters, who use it in the production of consumer goods packaging, food service items, and containerboard. The company's earnings are influenced by factors such as raw material costs, production efficiency, and the demand for private label products, as well as strategic partnerships with large retailers and industrial customers.

Clearwater Paper Financial Statement Overview

Summary

Clearwater Paper's financial performance is mixed. Despite a strong net profit margin and improved net income, revenue has declined, and cash flow challenges are apparent with a negative free cash flow. The balance sheet shows reduced financial leverage and improved equity metrics, suggesting a solid financial position, but cash flow issues may impact financial flexibility.

Income Statement

Positive

Clearwater Paper's revenue shows a decline of 10.54% in the TTM compared to the previous year, with total revenue of $1.863 billion. Despite the revenue drop, the company reported a strong net profit margin of 10.54% for the TTM due to a net income of $196.3 million, up significantly from $107.7 million in 2023. Gross profit margin decreased, reflecting reduced operational efficiency. EBIT and EBITDA margins are also lower, indicating challenges in controlling operating costs.

Balance Sheet

Positive

The balance sheet reveals a solid equity position with a debt-to-equity ratio of 0.33 as of the TTM, improved from 0.72 in 2023, indicating reduced financial leverage. The equity ratio stands at 50.89%, showing strong equity financing. Return on equity improved significantly to 22.98% due to the substantial increase in net income, suggesting efficient use of equity capital. However, total assets have remained relatively stable, indicating limited growth in asset base.

Cash Flow

Positive

Cash flows depict a concerning trend with a negative free cash flow of $54.8 million in the TTM, down from a positive $117 million in 2023. The operating cash flow to net income ratio is 0.31, showing that operating cash generation isn't keeping pace with net income growth. Free cash flow to net income ratio is negative, indicating cash flow challenges. This could limit future investments and debt repayment capabilities.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.38B	2.08B	2.08B	1.77B	1.87B
	Gross Profit
76.10M	330.80M	256.70M	182.60M	294.20M
	EBIT
-64.50M	177.10M	113.90M	1.70M	158.10M
	EBITDA
-900.00K	275.30M	219.70M	106.40M	258.20M
	Net Income Common Stockholders
196.30M	107.70M	46.00M	-28.00M	77.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
79.60M	42.00M	53.70M	25.20M	35.90M
	Total Assets
1.68B	1.67B	1.70B	1.69B	1.80B
	Total Debt
282.20K	478.50M	565.80M	639.20M	787.70M
	Net Debt
202.60K	436.50M	512.10M	614.00M	751.80M
	Total Liabilities
824.70M	1.00B	1.13B	1.18B	1.28B
	Stockholders Equity
854.60K	668.70M	572.00M	511.70M	521.10M
Cash Flow		Free Cash Flow
-54.80M	117.00M	116.70M	58.00M	207.40M
	Operating Cash Flow
61.40M	190.70M	150.20M	96.40M	247.00M
	Investing Cash Flow
167.30M	-73.70M	-33.50M	-25.10M	-39.60M
	Financing Cash Flow
-191.40M	-129.40M	-88.60M	-82.00M	-192.90M

Clearwater Paper Technical Analysis

Technical Analysis Sentiment

Negative

Last Price24.53

Price Trends

50DMA

26.56

Negative

100DMA

27.40

Negative

200DMA

31.51

Negative

Market Momentum

MACD

-0.44

Negative

RSI

45.67

Neutral

STOCH

57.21

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CLW, the sentiment is Negative. The current price of 24.53 is below the 20-day moving average (MA) of 24.84, below the 50-day MA of 26.56, and below the 200-day MA of 31.51, indicating a bearish trend. The MACD of -0.44 indicates Negative momentum. The RSI at 45.67 is Neutral, neither overbought nor oversold. The STOCH value of 57.21 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CLW.

Clearwater Paper Risk Analysis

Clearwater Paper disclosed 41 risk factors in its most recent earnings report. Clearwater Paper reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Clearwater Paper Peers Comparison

Overall Rating

UnderperformOutperform

Sector (47)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VHI	60 Neutral	$462.62M	4.31	10.95%	1.96%	9.53%	―
CLW	58 Neutral	$405.70M	33.74	-5.11%	―	-10.55%	-203.13%
RYAM	55 Neutral	$317.74M	―	-5.75%	―	-0.79%	62.16%
MATV	52 Neutral	$258.41M	4.60	-5.41%	8.44%	-13.97%	84.07%
MERC	47 Neutral	$362.44M	―	-15.99%	5.54%	2.48%	65.00%
RDUS	47 Neutral	$821.24M	―	-41.03%	2.58%	-4.98%	-910.57%
Sector *	47 Neutral	$2.43B	-3.06	-22.76%	3.59%	4.02%	-29.07%

* Basic Materials Sector Average

Performance Comparison

CLW

Clearwater Paper

24.53

-15.59

-38.86%

MERC

Mercer International

5.19

-3.85

-42.59%

RDUS

Schnitzer Steel Industries

29.07

12.59

76.40%

MATV

Mativ Holdings

4.85

-11.95

-71.13%

VHI

Valhi

15.61

0.71

4.77%

RYAM

Rayonier Advanced Materials

4.68

0.15

3.31%

Clearwater Paper Earnings Call Summary

Earnings Call Date: Feb 13, 2025 | % Change Since: -15.65% | Next Earnings Date: May 6, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a transformative year for Clearwater Paper with significant strategic moves like the acquisition of the Augusta facility and divestiture of the tissue business. While these moves and future demand projections are positive, the company faced notable challenges in the fourth quarter due to natural disasters and market pressures. However, the focus on cost reduction and a strong financial position underpin a cautiously optimistic outlook.

Highlights

Strategic Acquisitions and Divestitures

Clearwater Paper completed the acquisition of the Augusta Paperboard facility, increasing paperboard capacity by around 70%, and divested its tissue business for $1.06 billion, significantly deleveraging the balance sheet.

Demand and Market Recovery

Industry shipments increased by 4% in 2024 versus 2023, with demand projected to grow by 3% to 5% in 2025, indicating a return to pre-COVID levels and optimism about long-term prospects for paperboard packaging.

Cost Reduction Initiatives

Clearwater is targeting $30 million to $40 million in cost savings in 2025 through SG&A and operations reductions, including a 10% reduction in all positions across the company.

Financial Position

Clearwater significantly reduced net debt by $199 million in 2024, ending the year with a net leverage ratio of 1.1 times.

Lowlights

Fourth Quarter Challenges

$21 million of adjusted EBITDA in Q4 2024, down from $63 million in the previous year, due to fewer contributions from the tissue business, major maintenance expenses, and lower paperboard pricing.

Impact of Hurricane Helene

The Augusta facility was impacted by Hurricane Helene, leading to higher costs and operational disruptions during a planned major maintenance outage.

Pricing and Margin Pressure

The industry continued to operate with utilization rates below historical averages, resulting in lower market pricing and margin pressure.

Company Guidance

In the Clearwater Paper fourth quarter 2024 earnings call, key guidance metrics were discussed, including the impact of strategic transactions and operational performance. The company completed the acquisition of the Augusta Paperboard facility, increasing capacity by about 70% and contributing an expected $140-$150 million to annual adjusted EBITDA. Additionally, Clearwater sold its tissue business for $1.06 billion, using proceeds to significantly reduce debt. For Q4 2024, adjusted EBITDA was $21 million, down from $63 million the previous year, affected by the sale of the tissue business and operational disruptions from Hurricane Helene. The company aims for $30-$40 million in cost savings in 2025 and anticipates first-quarter adjusted EBITDA between $20-$30 million. Clearwater is also targeting revenue of $1.5-$1.6 billion for full-year 2025, expecting demand recovery with utilization rates of approximately 85%. They announced a $100 million share repurchase program, with $9 million already repurchased by February 2025.

Clearwater Paper Corporate Events

Executive/Board Changes

Clearwater Paper Announces CEO Employment Agreement

Neutral

Apr 4, 2025

On April 1, 2025, Clearwater Paper Corporation announced a new employment agreement with its President and CEO, Arsen S. Kitch, effective the same day. The agreement extends for one year with automatic renewals and maintains Kitch’s current salary and bonus structure. It includes provisions for severance and benefits in case of termination or change of control, along with restrictions on post-employment activities.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.