About a year ago, I wrote that Glatfelter (NYSE:GLT) could start to look more appealing
as an under-the-radar pick if the company were to stop missing
estimates. Since then the company has missed at the top line in every
quarter, as forex headwinds, problems in Russia/Ukraine, and unexpected
weakness in airlaid have sapped sales momentum. Add in some forced capex
for boiler conversions and the prospect of greater environmental
clean-up liabilities, and I think you could argue that the stock has
done well to be down only 7% since that last article.
I like the
prospects for Glatfelter to offset ongoing declines in uncoated
freesheet volumes with greater volumes of engineered and specialty
products. I also believe there is long-term upside from internal cost
reduction efforts and an ongoing skew towards higher-value specialty
products. Although the shares don't hold all that much appeal on a
discounted cash flow basis, they are trading below 7x forward EBITDA and
that's interesting given that I think the company can exceed 7% EBITDA
growth over the next three to five years.
Read more here:
Glatfelter Has To Do Better
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