The company is just a twinkle in one's eyes at this point (nothing, nada), except for the founders who get 20% of the company for $25,000, while the public fools pay $450 million for the remaining 80%.
It is hard for us to believe that RFP is trading as low as $4 per share. At $4 per share it means the market capitalization of the company is selling for less than $400 million dollars. The company has consolidated sales of close to $4 billion and in each of its major business segments, it is a global leader. It is the biggest volume producer of wood products east of the Rockies, the third largest in North America for Market Pulp, the number one producer of newsprint in the world and the largest producer in North America of uncoated mechanical paper and an emerging tissue producer. With the exception of the Wood Products segment, which has revenues of approximately $600 million, the other three segments each have revenues of approximately $1 billion. Each of the 4 business segments could easily fetch at least $400 million in a normal market.
In our opinion, the company's "normalized EBITDA (Earnings before interest, taxes, depreciation and amortization)" is approximately $400 million. In other words, with RFP trading at $4 per share, the market value of the company is being priced for about 1 times normalized EBITDA. The company does have net debt of approximately $365 million, but even if you include net debt, the market is valuing the entire company for less than 2 times normalized EBITDA. It had cash of approximately $300 million a year ago but used approximately $156 million to acquire Atlas Paper and is spending $270 million to convert some of its pulp mills in Calhoun, Tennessee to produce tissue papers.
A couple of years ago, it bought Fibrek Inc. for approximately $126 million. So, if you add the bolt-in acquisitions of Fibrek ($126 million), Atlas Paper ($156 million) and its conversion to tissue paper ($270 million), you end up with $552 million. In addition, the company has tax loss carryforwards of approximately $2 billion which it can use to offset future gains and income. All these factors lead us to believe that at current prices, RFP is very undervalued.
Is this a great quote or what?
There's a flood of avail CAT used equipment, and prices have been dropping. With such availability and at lower prices, this is a major reason for the sluggishness in their business. You looking to "collateral" is a very shallow analysis as you're not digging in and doing some real homework.
richoncat - I agree with you on CAT's financial situation (A+). The problem is that 4th quarter sales plummeted 23%, and this year, we can expect a 10% or more decline. Earnings (prior to restructuring charges) may come in around $3.75 or so. I think that the recovery will take longer than most expect. Having said that, I don't see that $75 is a fair price - forward P/E of 20 is much too risk for a cyclical stock. The dividend yield is healthy. I'd say that a fairer P/E is around 12-15, so IMO the shares are overvalued by at least $15 (dividend is what will keep the shares over $60).
If there business would never recover, i would not given them a P/E in the 12-15 range. It would be lower, but 9-10 due to their dividend paying ability and financial strength.
Pinky doesn't understand - UIHC will not be in a loss in Q1. He lacks perspective and the ability to assess financial statements.
UIHC's earnings will be positive, probably in the 10-18 cent range. The company has $20M of reinsurance protection coming, so this catastrophe loss is merely an acceleration - if the company has more catastrophes that significant exceed another $20M, then there will be some declinations in yearly earning estimates. I'm thinking that UIHC will exceed $1.80/share in 2016, and possibly $2/share. Hope that this helps.