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Francis Chou Comments on Resolute Forest Products

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GuruFocus.com
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- By Holly LaFon

As of June 30, 2018, the market price of Resolute Forest Products ( NYSE:RFP ) was at $10.35 per share, giving a market capitalization of roughly US$935 million dollars. As we have explained in the past, the company continues to have consolidated sales of close to US$3.5 billion and in each of its major business segments, it is a global leader. It continues to be 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. The wood products segment continues to have revenues of approximately US$800 million, while the other three segments each continue to have revenues of approximately US$900 million. We believe that each of the four business segments could fetch at least US$400 million in a normal market and, as a result, RFP may be undervalued.


With the new CEO coming in, there is more optimism on what the company can do with its four business segments. This is reflected in the stock price as it has moved up from $4.60 in March 2017 to $10.35 as of June 30, 2018.


From Franci Chou's Chou Associates Fund 2018 semi-annual letter.

This article first appeared on GuruFocus.