Rock-Tenn (RKT)
is a fairly well-respected company in the paper packaging industry, but
the company has struggled to generate appreciably better returns on
capital over time. I suspect that is at least part of the reason that
the company has lagged both International Paper (IP) and Packaging Corp (PKG) over the long term and other players like Graphic Packaging (GPK) and MeadWestvaco (MWV) more recently.
The
company took on a big operational challenge (and a lot of debt) when it
acquired Smurfit-Stone at a generous price in 2011, but the company has
likely not maxxed out the potential synergies and operational
improvements here. I do have some concerns about the near-term health of
the corrugated and containerboard markets, but it looks as though the
shares already factor in a fair bit of that risk.
Read the full article here:
Smart Deals And Smurfit Synergies Can Still Help Rock-Tenn
Showing posts with label International Paper. Show all posts
Showing posts with label International Paper. Show all posts
Wednesday, April 30, 2014
Monday, January 7, 2013
Investopedia: Rock 'em Sock 'em Rock-Tenn
There's a saying out there (from Warren Buffett,
I believe) that goes something like "whenever a great management team
and a lousy industry come together, it's the industry that maintains its
reputation." That warning would seem to apply to Rock-Tenn (NYSE:RKT)
these days as although the company's stock has done reasonably well,
management continues to struggle to deliver on the potential synergies and operational improvements at the former Smurfit-Stone assets.
The crux of the Rock-Tenn argument is pretty simple. If Rock-Tenn can do with Smurfit-Stone's corrugated packaging assets what it did previously with its own paperboard/containerboard assets, this will be a large and profitable company. If Rock-Tenn cannot lift up those Smurfit-Stone assets, then the company will languish from a value-destroying deal that levered the balance sheet and saddled it with lesser assets.
Please continue here:
http://www.investopedia.com/
The crux of the Rock-Tenn argument is pretty simple. If Rock-Tenn can do with Smurfit-Stone's corrugated packaging assets what it did previously with its own paperboard/containerboard assets, this will be a large and profitable company. If Rock-Tenn cannot lift up those Smurfit-Stone assets, then the company will languish from a value-destroying deal that levered the balance sheet and saddled it with lesser assets.
Please continue here:
http://www.investopedia.com/
Wednesday, October 17, 2012
Investopedia: Packaging Corp Shows The Risk Of Underestimating Good Companies
It's well worth remembering that good companies have a way of surpassing
expectations and delivering strong results. I should have remembered
that lesson last quarter when it came to Packaging Corp of America (NYSE:PKG).
While I have long liked Packaging Corp (aka "PCA") as one of the best-run paper/packaging companies in the country, I didn't see much slack left in the valuation. Yet, not only has the company continued to see good expense leverage, but it has continued to gain share in the market, while enjoying strong industry-wide pricing. That propelled the stock up more than 20% over the past three months.
Please continue here:
http://www.investopedia.com/
While I have long liked Packaging Corp (aka "PCA") as one of the best-run paper/packaging companies in the country, I didn't see much slack left in the valuation. Yet, not only has the company continued to see good expense leverage, but it has continued to gain share in the market, while enjoying strong industry-wide pricing. That propelled the stock up more than 20% over the past three months.
Please continue here:
http://www.investopedia.com/
Wednesday, July 18, 2012
Investopedia: Packaging Corp Continues To Play A Solid Hand
Containerboard and corrugated packaging is admittedly not the most
exciting of market sectors, and it is most definitely a commodity
market. But not all commodities are quite the same, and Packaging Corp (NYSE:PKG)
has built a solid defensible niche by running low-cost mills and
focusing on specialty products and regional customers that companies
like International Paper (NYSE:IP) and Rock-Tenn (NYSE:RKT)
do not. While Packaging Corp (aka "PCA") is rightly well-respected
within the industry for its patient, conservative approach, it's worth
wondering if there's enough growth here to really appeal to investors.
Please click here for more:
http://stocks.investopedia.
Please click here for more:
http://stocks.investopedia.
Friday, February 10, 2012
Investopedia: Glatfelter Worth A Closer Look
Investors who are familiar with my writing know that I love companies that look like they should be just commodity companies, but actually have fairly interesting businesses under their roofs. Glatfelter (NYSE:GLT) is a good example - while this company still is largely a paper company, it has also worked hard to diversify and reinvest cash flow into higher-growth markets. Although the stock is not tremendously cheap today, it definitely merits a spot on investor watchlists.
Read more here:
http://stocks.investopedia.
Read more here:
http://stocks.investopedia.
Wednesday, January 25, 2012
Investopedia: Packaging Corp Thinks Outside The Box
Time after time, investors who do a little extra work to identify those companies in commodity industries that do things a little better, see long-term rewards. It was true years ago in steel, when Nucor (NYSE:NUE) pioneered a new model, and it's true, at least to some extent, in containerboard (boxes) with Packaging Corp (NYSE:PKG).
A Good End to the Year, Relatively Speaking
At first glance, Packaging Corp's earnings aren't going to look all that great. Revenue rose just 4% on a 0.2% increase in containerboard production and 7% increase in box shipments. Given that industry prices were not very strong in the second half of the year, that was a pretty good result for Packaging Corp and a little better than the Street was expecting.
Click here for more:
http://stocks.investopedia.
Tuesday, December 13, 2011
Investopedia: Has Greif Reset Expectations?
Although industrial packaging company Greif (NYSE:GEF) has compelling share in categories like steel and plastic drums, as well as multiwall bags, and a solid long-term plan for boosting margins, this year has ended on a sour note. With sales in Europe down significantly, Greif is going to have to reestablish its credibility with the Street. Should it do so, though, there could be worthwhile rewards here for patient investors.
A Sour End to the Year
Arguably the best that can be said about Greif's fiscal fourth quarter is that it didn't surprise anyone, as the company had warned the Street back in late November. Revenue rose 14% as reported, but organic growth was basically nonexistent, as declines in comparable volume erased some price increases. Although reported revenue growth in the industrial packaging business came in at 15%, the real result was basically zero, while there was real revenue growth in the much smaller flexible packaging business.
Read more here:
http://stocks.investopedia.
A Sour End to the Year
Arguably the best that can be said about Greif's fiscal fourth quarter is that it didn't surprise anyone, as the company had warned the Street back in late November. Revenue rose 14% as reported, but organic growth was basically nonexistent, as declines in comparable volume erased some price increases. Although reported revenue growth in the industrial packaging business came in at 15%, the real result was basically zero, while there was real revenue growth in the much smaller flexible packaging business.
Read more here:
http://stocks.investopedia.
Monday, November 14, 2011
Investopedia: Rock-Tenn Still Rolling
Packaging is typically a difficult business. After all, most things that need a package already have them, and customers are always pushing for new designs that eliminate materials and cut costs. What's more, it's a business that relies on difficult-to-control commodity inputs like natural gas, wood and wastepaper, and plenty of companies have wrecked industry pricing in the past by gorging on debt-fueled capacity only to cut prices to keep those factories running.
Against that depressing backdrop, Rock-Tenn (NYSE:RKT) stands out as a different sort of company. Rock-Tenn has often been an unusually efficient operator, and a leader in niches, like in-store displays. Now, with the large Smurfit-Stone acquisition, Rock-Tenn management has the opportunity to leverage their skills over a much larger business, and drive larger returns for shareholders.
Read the full article here:
http://stocks.investopedia.
Against that depressing backdrop, Rock-Tenn (NYSE:RKT) stands out as a different sort of company. Rock-Tenn has often been an unusually efficient operator, and a leader in niches, like in-store displays. Now, with the large Smurfit-Stone acquisition, Rock-Tenn management has the opportunity to leverage their skills over a much larger business, and drive larger returns for shareholders.
Read the full article here:
http://stocks.investopedia.
Monday, September 12, 2011
Investopedia: International Paper Wraps Up Temple-Inland
As is so often the case, once again an acquisition target's howls of protest have been soothed by a modest increase in the price of the deal. On Tuesday morning, International Paper (NYSE:IP) announced that it has reached an agreement with Temple-Inland (NYSE:TIN) on a friendly acquisition with a slightly higher price than IP's original bid.
A Small Bump To "Yes"
International Paper secured the support of Temple-Inland's board by offering $32 a share in cash and the assumption of $600 million in debt - a total deal value of $4.3 billion. At that price, Temple-Inland shareholders are seeing a roughly 30% premium to Friday's close and a trailing EV/EBTIDA valuation of roughly 10 - a slight discount to Rock-Tenn (NYSE:RKT), but a premium to Packaging Corp (NYSE:PKG) and the larger packaging sector.
To read the full story, click the link below:
http://stocks.investopedia.
A Small Bump To "Yes"
International Paper secured the support of Temple-Inland's board by offering $32 a share in cash and the assumption of $600 million in debt - a total deal value of $4.3 billion. At that price, Temple-Inland shareholders are seeing a roughly 30% premium to Friday's close and a trailing EV/EBTIDA valuation of roughly 10 - a slight discount to Rock-Tenn (NYSE:RKT), but a premium to Packaging Corp (NYSE:PKG) and the larger packaging sector.
To read the full story, click the link below:
http://stocks.investopedia.
Wednesday, June 8, 2011
Investopedia: International Paper Makes A Grab For Temple-Inland
Not long after Rock-Tenn (NYSE:RKT) finished its deal for Smurft-Stone, International Paper (NYSE:IP) has decided to make its own play for further consolidation in the packaging business. Late Monday, IP announced that it had launched a hostile offer for Temple-Inland (NYSE:TIN), but Temple-Inland quickly shot down the offer and implemented a poison pill. What remains to be seen now is whether IP can raise the stakes high enough to either persuade the board to change its mind or compel Temple-Inland's own shareholders to rise up and demand approval of the deal.
The Deal
IP surprised the market with a $30.60 cash bid for Temple-Inland, a price about 46% above the company's prior value. If the deal happens, IP would pick up Temple-Inland's 4 million tons of containerboard capacity, over 2 billion square feet in gypsum wallboard capacity, and significant capacity in other building products like lumber and particleboard. Not only would the deal make the combined company a force in containerboard (with about 39% share) with all the attendant synergies of scale, but it would move IP further into the building products sector. For more, see Smurfit Stone Emerges From The Dead.)
Doth Temple-Inland Protest Too Much?
Poring over the "he said, he said" of the dueling press releases, it seems pretty clear that IP approached Temple-Inland and that Temple-Inland turned them down cold (a unanimous board vote against the $30.60 deal). Of course, as is part and parcel of such rejections, Temple-Inland loaded its response with mock indignation that IP would dare offer such a low price, called the deal opportunistic, complained that IP's comparables are unfair and so on. In other words, standard boilerplate language for a rejection.
Please continue by clicking the link:
http://stocks.investopedia.
The Deal
IP surprised the market with a $30.60 cash bid for Temple-Inland, a price about 46% above the company's prior value. If the deal happens, IP would pick up Temple-Inland's 4 million tons of containerboard capacity, over 2 billion square feet in gypsum wallboard capacity, and significant capacity in other building products like lumber and particleboard. Not only would the deal make the combined company a force in containerboard (with about 39% share) with all the attendant synergies of scale, but it would move IP further into the building products sector. For more, see Smurfit Stone Emerges From The Dead.)
Doth Temple-Inland Protest Too Much?
Poring over the "he said, he said" of the dueling press releases, it seems pretty clear that IP approached Temple-Inland and that Temple-Inland turned them down cold (a unanimous board vote against the $30.60 deal). Of course, as is part and parcel of such rejections, Temple-Inland loaded its response with mock indignation that IP would dare offer such a low price, called the deal opportunistic, complained that IP's comparables are unfair and so on. In other words, standard boilerplate language for a rejection.
Please continue by clicking the link:
http://stocks.investopedia.
Wednesday, January 26, 2011
Investopedia: An Off-The-Board Bidder For Smurfit-Stone
The idea that Smurfit-Stone Container (Nasdaq:SSCC) was not going to stay public for too much longer was not all that controversial. After all, the company was a leading manufacturer of containerboard (#2 in the United States), well positioned relative to virgin fiber resources, and not in possession of a terribly dynamic restructuring-oriented management. Consequently, it would not have been surprising to see a company like Temple-Inland (NYSE:TIN) or Koch Industries' Georgia-Pacific step in and acquire Smurfit to better compete with International Paper (NYSE:IP).
Well, Rock-Tenn (NYSE:RKT) had other ideas. In what is virtually a merger of equals, Rock-Tenn came in with a cash and stock bid for Smurfit-Stone that creates a rather interesting new company in the space and would seem to offer a compelling match of strengths.
The Deal
Rock-Tenn hopes to acquire Smurfit-Stone in a $3.5 billion bid composed of $17.50 in cash and 0.30605 shares of Rock-Tenn for each share of Smurfit-Stone. That gives Smurfit shareholders a 27% premium to Friday's price. At a bit more than 6 times trailing EBTIDA (annualizing Smurfit's last quarter), the deal premium is lower than what IP paid three years ago for Weyerhauser's (NYSE:WY) containerboard assets, but does not seem radically out of line with typical industry valuations (Rock-Tenn itself trades at 6.4x trailing EBITDA).
Please click below to go to the full article:
http://stocks.investopedia.
Well, Rock-Tenn (NYSE:RKT) had other ideas. In what is virtually a merger of equals, Rock-Tenn came in with a cash and stock bid for Smurfit-Stone that creates a rather interesting new company in the space and would seem to offer a compelling match of strengths.
The Deal
Rock-Tenn hopes to acquire Smurfit-Stone in a $3.5 billion bid composed of $17.50 in cash and 0.30605 shares of Rock-Tenn for each share of Smurfit-Stone. That gives Smurfit shareholders a 27% premium to Friday's price. At a bit more than 6 times trailing EBTIDA (annualizing Smurfit's last quarter), the deal premium is lower than what IP paid three years ago for Weyerhauser's (NYSE:WY) containerboard assets, but does not seem radically out of line with typical industry valuations (Rock-Tenn itself trades at 6.4x trailing EBITDA).
Please click below to go to the full article:
http://stocks.investopedia.
Wednesday, October 27, 2010
Taking Multiple Cuts At Plum Creek
These are strange times for companies trying to operate in the timberland industry. Although timberland theoretically offers the advantage of allowing companies to sit tight and literally let their assets grow, the reality for public companies is the expectation of ongoing dividend payments and growth that necessitates active management. As one of the go-to names in the timber business, Plum Creek (NYSE:PCL) is a mixed bag of good and bad news for investors today.
The Quarter That Was
Expectations were not all that high for the third quarter, but Plum Creek disappointed nevertheless. Performance in the actual timber business was not too bad - sawlog prices were higher than in the year-ago period, although still not at a level that is all that attractive. Due in part to uninspiring market conditions, then, Plum Creek has pulled back on its harvest levels.
The bigger issue, though, was in the real estate business. Not surprisingly, demand for land for housing remains weak and revenue and operating profits tied to real estate sales have dropped precipitously, draining away a high-margin source of business. Due in part to the ongoing slump in real estate, Plum Creek took down numbers for the fourth quarter.
Please see the link below for the full piece on PCL:
http://stocks.investopedia.
The Quarter That Was
Expectations were not all that high for the third quarter, but Plum Creek disappointed nevertheless. Performance in the actual timber business was not too bad - sawlog prices were higher than in the year-ago period, although still not at a level that is all that attractive. Due in part to uninspiring market conditions, then, Plum Creek has pulled back on its harvest levels.
The bigger issue, though, was in the real estate business. Not surprisingly, demand for land for housing remains weak and revenue and operating profits tied to real estate sales have dropped precipitously, draining away a high-margin source of business. Due in part to the ongoing slump in real estate, Plum Creek took down numbers for the fourth quarter.
Please see the link below for the full piece on PCL:
http://stocks.investopedia.
Thursday, September 23, 2010
Packaging Getting Boxed In
Investors certainly brought out the box cutters on Monday, taking down the stocks of most of the significant corrugated packaging companies. While the S&P 500 and other market indexes started off the week with better than 1% gains, packaging companies saw their stocks drop on average around 5% amidst higher volume. While the largest packaging company, International Paper (NYSE:IP), suffered the worst with a 6.4% drop, number two player Smurfit-Stone (Nasdaq:SSCC) got off relatively lightly with a nearly 3% decline.
No Mystery As to Why
The reason for the drop was pretty straightforward. An industry journal, Pulp and Paper Week, reported that a price hike implemented by the industry in August has not held up, and prices have settled back to the former level. Not only will that pricing adjustment trigger some customer rebates, it also will take a meaningful chunk of out the sector's forward earnings prospects, as these companies are presently profitable and a fair bit of that price hike should have flowed to the bottom lines.
The full article can be found at the following link:
http://stocks.investopedia.com/stock-analysis/2010/Packaging-Getting-Boxed-In-IP-SSCC-PKG-TIN-WY-FOR0923.aspx
No Mystery As to Why
The reason for the drop was pretty straightforward. An industry journal, Pulp and Paper Week, reported that a price hike implemented by the industry in August has not held up, and prices have settled back to the former level. Not only will that pricing adjustment trigger some customer rebates, it also will take a meaningful chunk of out the sector's forward earnings prospects, as these companies are presently profitable and a fair bit of that price hike should have flowed to the bottom lines.
The full article can be found at the following link:
http://stocks.investopedia.com/stock-analysis/2010/Packaging-Getting-Boxed-In-IP-SSCC-PKG-TIN-WY-FOR0923.aspx
Friday, April 30, 2010
Plum Creek Gets Pruned
I wrote the following on Plum Creek (PCL), one of my favorite REITs and a stock I wish I had just held on to instead of sold a long time ago...
http://stocks.investopedia.com/stock-analysis/2010/Plum-Creek-Gets-Pruned-PCL-WY-RYN-IP-NP0430.aspx
Memo to Plum Creek Timber (NYSE:PCL) management - in the future, try not to post earnings on the same day that western Europe appears to be melting down into the financial Stone Age.
That would be the most logical explanation to this writer, as to why the stock is down nearly 8% (as of Tuesday's close), on earnings that were at least acceptable. Still, whenever the stock of a high-quality company goes down more than it should in the absence of truly bad news, I get a little interested.
For the rest, click on through:
http://stocks.investopedia.com/stock-analysis/2010/Plum-Creek-Gets-Pruned-PCL-WY-RYN-IP-NP0430.aspx
http://stocks.investopedia.com/stock-analysis/2010/Plum-Creek-Gets-Pruned-PCL-WY-RYN-IP-NP0430.aspx
Memo to Plum Creek Timber (NYSE:PCL) management - in the future, try not to post earnings on the same day that western Europe appears to be melting down into the financial Stone Age.
That would be the most logical explanation to this writer, as to why the stock is down nearly 8% (as of Tuesday's close), on earnings that were at least acceptable. Still, whenever the stock of a high-quality company goes down more than it should in the absence of truly bad news, I get a little interested.
For the rest, click on through:
http://stocks.investopedia.com/stock-analysis/2010/Plum-Creek-Gets-Pruned-PCL-WY-RYN-IP-NP0430.aspx
Subscribe to:
Posts (Atom)