Yesterday, I was looking for stocks in the consumer goods sector with a market capitalization greater than or equal to $3 billion, that have a price/earnings ratio between 0 and 15, a price-book ratio between 0 and 2 and a current ratio greater than or equal to 2. I ended up with this stock:
Source: WSJ Stock Screener
Fibria Celulose SA (FBR, Financial), a Brazil-based pulp and paper producer, closed the second quarter of 2016 reporting net revenue of 2.39 billion reals ($741.7 million) (beating analysts’ expectations by R$160 million), a 3.5% increase year-over-year due to higher sales volume (1,342 million tons in the quarter, considering the Klabin volumes) and the 14% appreciation of the average dollar, which offset the 13% slide in the pulp price in dollars.
Adjusted second quarter 2016 EBITDA totaled R$925 million, a 20% decline year-over-year, was due to increased cash COGS per ton and the 1% slide in the average net price in reals.
Free cash flow for the quarter, before expansion capex and dividend payments, amounted to R$413 million, a 16% decrease year-over-year due to higher interest paid. The operation with Klabin had no impact on EBITDA or free cash flow.
In the second quarter, the company reported EPS of R$1.34 and missed analysts’ expectations by R$0.05.
Over the last twelve months, the net revenue (including net revenue from Klabin pulp sales), EBITDA and FCF were R$10.5 million, R$5.342 million and R$3.02 million.
Pulp inventories closed the quarter at 931 thousand t (54 days), 15% up on the comparable quarter of 2015 – 809 thousand t (54 days).
The second quarter was marked by the resumption of Chinese demand for hardwood pulp, following the beginning of year decline in sales volume and price slide. As a main highlight, the hardwood pulp sales to the Chinese market grew 7.4% during the period.
Financial performance:
- Largest issuance of CRA (Agribusiness receivable certificates) in Brazil: R$1.35 billion (R$2.4 billion demand)
- Cash on hand of $932 million (US)
- Net debt of $3.03 million (US)
- Leverage at US dollars at 2.1x, (versus 1.85x in first quarter 2016), in line with expectations
- Investment grade rating with stable outlook by S&P and Fitch.
Fibria is the world's largest producer of eucalyptus pulp. The company has an annual production capacity of 5.3 million tons on a total forest base, covering 2.4 million acres (of which, 847,571.5 acres have been set aside for environmental conservation), with mills located in TrĂŞs Lagoas (Mato Grosso do Sul), Aracruz (EspĂ Ârito Santo), JacareĂ Â (SĂŁo Paulo), besides Veracel, a mill in Eunápolis (Bahia) and a Joint-Operation with Stora Enso. In partnership with Cenibra, it operates Portocel, in Aracruz, the only Brazilian port specialized in pulp shipments.
Its operations are based entirely on renewable forest plantations.
Analysts covering Fibria Celulose rate it 2.6. The recommendation rating ranges between 1 (Strong Buy) and 5 (Sell).
Source: Yahoo Finance
The average price target is $36.04 versus a current share price of $6.32.
The stock is down trending and was outpaced by the S&P 500 by 57% YTD.
Disclosure: I have no positions in Fibria Celulose SA.
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