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Paper Stocks' Q2 Earnings To Watch On Jul 27: UFS, KS & TIS

Published 07/26/2016, 07:22 AM
Updated 07/09/2023, 06:31 AM

The Q2 earnings season is gaining momentum with 189 companies on the S&P 500 index reporting this week. Although it is too early to predict any clear pattern, the 126 companies that have reported results till Friday (Jul 22), more or less confirm the grim earnings projections for the quarter. Based on the hitherto declared results, Q2 is widely expected to be the fifth consecutive quarter to report an earnings decline for the benchmark index.

Plagued by a plethora of macroeconomic issues and continued volatility in the equity market, Q2 earnings estimates for the S&P 500 index have hovered in the negative territory, improving slightly from the last quarter. Per the latest Earnings Trend Report, overall Q2 earnings for the S&P 500 companies are expected to be down 3.4% on a 0.5% decline in revenues. The relative improvement in negative estimate revisions for the quarter is largely due to a turnaround in oil prices and fading effects of the dollar strength. The S&P 500 has also witnessed a dramatic reversal in its fortunes when it shrugged off about 5.3% drop in just two trading sessions (on the Brexit referendum) to record over 2% return for the quarter.

However, the overall Q2 earnings scenario still remains clouded with uncertainty. What is more alarming is that the likely dismal earnings performance is not attributable to the inherent weakness of the Energy sector alone. Rather, downward estimate revisions are expected in almost all the sectors, barring a few. About 9 of the 16 sectors are expected to witness an earnings decline in the quarter under review, with Oil/Energy, Basic Materials, Transportation and Industrial Products being the most notable.

Among the Paper stocks slated to report this week, let’s have a sneak peek at three major industry players to see how things are shaping up for the upcoming quarterly results.

Domtar Corporation (TO:UFS) is scheduled to report second-quarter 2016 results before the opening bell on Jul 27. Our proven model does not conclusively show that Domtar is likely to beat earnings this quarter as it lacks the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for an earnings beat. With a Zacks Rank #5 (Strong Sell) and an Earnings ESP of -26.32%, Domtar fails to meet these criteria.

DOMTAR CORP Price and EPS Surprise

DOMTAR CORP Price and EPS Surprise | DOMTAR CORP Quote

KapStone Paper and Packaging Corporation (NYSE:KS) will report second-quarter 2016 results after the closing bell on Jul 27. The company has a Zacks Rank #4 (Sell) with an Earnings ESP of 0.00%, making it difficult to conclusively predict an earnings beat this quarter.

KAPSTONE PAPER Price and EPS Surprise

KAPSTONE PAPER Price and EPS Surprise | KAPSTONE PAPER Quote

Orchids Paper Products Company (NYSE:TIS) is likely to report second-quarter 2016 results after the closing bell on Jul 27. With a Zacks Rank #3 and an Earnings ESP of 0.00%, an earnings beat for the impending quarter cannot be conclusively predicted.

ORCHIDS PAPER Price and EPS Surprise

ORCHIDS PAPER Price and EPS Surprise | ORCHIDS PAPER Quote



DOMTAR CORP (UFS): Free Stock Analysis Report

KAPSTONE PAPER (KS): Free Stock Analysis Report

ORCHIDS PAPER (TIS): Free Stock Analysis Report

Original post

Zacks Investment Research

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