Sunday, June 21, 2015

Seeking Alpha: All's Well With Neenah Paper, But It's Priced Like It

What can I really complain about with Neenah Paper (NYSE:NP)? The shares didn't provide that pullback I was hoping for back in October and they're up about 12% from the time of that last article, beating other specialty paper companies like Glatfelter (NYSE:GLT), Schweitzer-Mauduit (NYSE:SWM), as well as Finland's Ahlstrom once you adjust for the currency moves between the dollar and markka. What's more, while the organic revenue growth hasn't been torrid, it's been quite solid relative to the underlying markets and segment-level profitability has been looking good.

If I'm going to complain (and regular readers know I'm going to...), it's about the valuation. The valuation does look a little stretched on an organic DCF basis, but not unreasonable on an EV/EBITDA basis nor when factoring in the potential benefits of further M&A. I'm not a big fan of "buy high and sell higher" with companies where the revenue growth potential is modest, but I don't think I'd be in any rush to sell these shares unless I knew I had a better idea to pursue.

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All's Well With Neenah Paper, But It's Priced Like It

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