Growing Through Challenges? – Domtar Corporation (NYSE: UFS)


SSgA Funds Management, Inc. recently announced the acquisition of new stake in Domtar Corporation (NYSE:UFS). The institutional investor has increased its shareholding in the Basic Materials company by 32.33% to 2.0 million shares with purchase of 0.49 million shares. This fresh investment now brings its stake to 3.63% valued currently at $40.88 million. In addition, Donald Smith & Co., Inc. raised its holdings by 0.95 million to 0.95 million shares. And Millennium Management LLC has lifted its position by 66.65% or 0.37 million shares – to 0.92 million shares.

With over 1.41 million Domtar Corporation (UFS) shares trading Thursday and a closing price of $19.25 on the day, the dollar volume was approximately $27.09 million. The shares have shown a negative weekly performance of -4.66% and its price on 07/09/20 lost nearly -1.33%. Currently, there are 56.10M common shares owned by the public and among those 55.01M shares have been available to trade.

An analysis of what Wall Street brokers have to say about the expected price targets for this stock gives us this picture: 12 analysts who have offered their price forecasts for UFS have a consensus price objective of $26.82. The analysts have set the share’s price value over the next 12 months at a high of $34.00 and a low of $22.00 should the stock experience a downside. Incidentally, analysts’ outlook for the Domtar Corporation stock is 2.70 for the next 12 months. The average price target is 28.94% above its last price level and an upside to the estimated low will see the stock gain 12.5% over that period. But an upside of 43.38% will see the stock hit the forecast high price target while mean target price for the stock is $26.00.

Insiders at the company have transacted a total of 77 times over the past 12 months, according to data filed with the U.S. Securities and Exchange Commission (SEC). 35 of these insider trades were purchases, accounting for 183,914 shares. Insider sales of the common stock occurred on 42 occasions, with total insider shares sold totaling 73,596 shares.

The top 3 mutual fund holders in Domtar Corporation are DFA US Small Cap Value Portfolio, Vanguard Total Stock Market Index, and iShares Core S&P Mid Cap ETF. DFA US Small Cap Value Portfolio owns 1.89 million shares of the company’s stock, all valued at over $38.48 million. The company bought an additional 19517.0 shares recently to bring their total holdings to about 3.42% of the shares outstanding. Vanguard Total Stock Market Index sold 1820.0 shares to see its total holdings shrink to 1.63 million shares valued at over $33.17 million and representing 2.95% of the shares outstanding. iShares Core S&P Mid Cap ETF bought 3280.0 shares to bring its total holdings to over 1.58 million shares at a value of $32.14 million. iShares Core S&P Mid Cap ETF now owns shares totaling to 2.86% of the shares outstanding.

Shares of Domtar Corporation (NYSE: UFS) opened at $19.33, down -$0.18 from a prior closing price of $19.51. However, the script later closed the day at $19.25, down -1.33%. The company’s stock has a 5-day price change of -4.66% and -15.64% over the past three months. UFS shares are trading -49.66% year to date (YTD), with the 12-month market performance down to -54.35% lower. It has a 12-month low price of $18.40 and touched a high of $43.01 over the same period. Currently, 1.41 million shares have been traded, compared to an average intraday trading volume of 1.07 million shares. The stock is trading above its simple moving averages at the SMA20, SMA50, and SMA200, as the current price level is off by -10.13%, -11.26%, and -36.07% respectively.

Institutional ownership of Domtar Corporation (NYSE: UFS) shares accounts for 98.30% of the company’s 56.10M shares outstanding. Mutual fund holders own 40.70%, while other institutional holders and individual stakeholders account for 54.46% and 0.52% respectively.

It has a market capitalization of $1.04B and a beta (3y monthly) value of 1.71. The stock’s trailing 12-month PE ratio is 181.60, while the earnings-per-share (ttm) stands at $0.11. The company has a PEG of 36.32 and a Quick Ratio of 1.10 with the debt-to-equity ratio at 0.51. Price movements for the stock have been influenced by the stock’s volatility, which stands at 4.57% over the week and 5.71% over the month.

Analysts forecast that Domtar Corporation (UFS) will achieve an EPS of -$0.45 for the current quarter, -$0.21 for the next quarter and $0.61 for 2021. The lowest estimate earnings-per-share for the quarter is -$0.6 while analysts give the company a high EPS estimate of $0.03. Comparatively, EPS for the current quarter was $0.57 a year ago. Earnings per share for the fiscal year are expected to decrease by -68.80%, and 200.00% over the next financial year. EPS should grow at an annualized rate of 5.00% over the next five years, compared to -27.10% over the past 5-year period.

If you are looking to buy this stock, then you may note that the average analyst recommendation by 12 brokerage firm advisors rate Domtar Corporation (UFS) as a “Moderate Buy” at a consensus score of 2.70. Specifically, 3 Wall Street analysts polled rate the stock as a buy, while 8 of the 12 advise that investors “hold,” and 0 rated it as a “Sell.”

Looking at the support for the UFS, a number of firms have released research notes about the stock. RBC Capital Mkts stated their Sector Perform rating for the stock in a research note on June 05, 2020, with the firm’s price target at $27. DA Davidson coverage for the Domtar Corporation (UFS) stock in a research note released on May 11, 2020 offered a Neutral rating with a price target of. RBC Capital Mkts was of a view on March 17, 2020 that the stock is Outperform, while BofA/Merrill gave the stock Underperform rating on March 16, 2020 $22. BMO Capital Markets on their part issued Outperform rating on March 13, 2020.


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