Domtar Story

<div class='circular--portrait' style='background:#FF6600;color: #FFFAFA;font-size:3em;'>UFS</div>
UFS -- USA Stock  

USD 26.03  1.80  6.47%

Domtar is scheduled to announce its earnings today. The next earnings report is expected on the 23rd of October 2020. The stock is currently experiencing an active upward rally. Domtar Free Cash Flow is relatively stable at the moment as compared to the past year. Domtar reported last year Free Cash Flow of 136.85 Million. As of 08/07/2020, Invested Capital is likely to grow to about 6.8 B, while PPandE Turnover is likely to drop 1.79. As many investors are getting excited about basic materials space, it is fair to sum up Domtar as an investment option.
Published over a month ago
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Will Domtar (NYSE:UFS) debt increase in September
Domtar has 1.2 B in debt with debt to equity (D/E) ratio of 0.55, which is OK given its current industry classification. The entity has a current ratio of 2.02, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. About 99.0% of the company outstanding shares are owned by institutional investors. Domtar has Price to Book (P/B) ratio of 0.54. Historically many companies with similar price-to-book (P/B) ratio do better than the market in the long run. The entity has Price/Earnings (P/E) ratio of 142.95. The firm last dividend was issued on the 1st of April 2020. Domtar had 2:1 split on the 18th of June 2014.
Domtar financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Domtar, including all of Domtar's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Domtar assets, the company is considered highly leveraged. Understanding the composition and structure of overall Domtar debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding Domtar Total Liabilities

Domtar liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Domtar has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Domtar balance sheet include debt obligations and money owed to different Domtar vendors, workers, and loan providers. Below is the chart of Domtar short long-term liabilities accounts currently reported on its balance sheet.
You can use Domtar financial leverage analysis tool to get a better grip on understanding its financial position

How important is Domtar's Liquidity

Domtar financial leverage refers to using borrowed capital as a funding source to finance Domtar ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Domtar financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Domtar's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for Domtar, but it might be worth checking our own buy vs. sell analysis

Breaking down Domtar Indicators

The firm reported the last year's revenue of 5.12 B. Total Income to common stockholders was 9 M with profit before taxes, overhead, and interest of 995 M.

Liabilities Breakdown

930.7 M
Tax Liabilities
725.9 M
Current Liabilities
2.8 B
Long-Term Liabilities
Total Liabilities3.03 Billion
Current Liabilities725.89 Million
Long-Term Liabilities2.79 Billion
Tax Liabilities930.66 Million

Our take on today Domtar spike

Latest total risk alpha indicator falls down to -0.35. Possible price gain? Domtar exhibits above-average semi-deviation for your current time horizon. We encourage investors to investigate Domtar individually to make sure intended market timing strategies and available technical indicagtors are consistent with their estimates about Domtar future systematic risk.

Our Takeaway on Domtar Investment

While some other entities under the paper & paper products industry are still a bit expensive, Domtar may offer a potential longer-term growth to retail investors. While some retail investors may not share our view we believe that the current risk-reward utility is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Domtar.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Domtar. Please refer to our Terms of Use for any information regarding our disclosure principles.

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