(NP) Neenah Paper, Inc. – Momentum – Zacks Rank Buy

June 5th, 2009

Neenah Paper, Inc. (NP) recently reported first-quarter results. Earnings came in 88% ahead of the consensus estimate, and analysts are bullish on earnings going forward. Management said the company is poised to grow stronger as global economies recover.

Company Description

Neenah Paper manufactures premium, performance-based papers and specialty products used in a variety of applications including filtration, printing and writing. The company makes well-known brands like CLASSIC®, ENVIRONMENT®, STARWHITE®, Gessner®, JET-PRO® SofStretch(TM) and varitess®.

Based in Alpharetta, Georgia, Neenah Paper has manufacturing operations in the United States and Germany as well as about 500,000 acres of timberlands in Nova Scotia, Canada.

A Solid Quarter

The company recently reported first-quarter results. While the earnings result was actually a loss of 5 cents per share, it was 88% ahead of the consensus estimate and an improvement from the previous quarter’s 62-cent loss. Last year’s first-quarter earnings totaled 57 cents.

Management said the company is poised to grow stronger as global economies recover. Sean Erwin, Chairman and Chief Executive Officer, commented, “operating results improved by almost $15 million from the fourth quarter of 2008 as we benefited from actions we have taken to reduce costs and from lower input prices. Our liquidity position improved as each of our businesses continues to generate positive cash flows, and we paid down debt for the second consecutive quarter.”

Higher Forecasts

Analysts are bullish on earnings going forward. For the second quarter, Wall Street analysts are forecasting earnings of 5 cents per share, above last month’s estimates of a 15-cent loss.

Full-year 2009 projections of a profit of 15 cents were revised upward from last month’s forecasts of a loss of 60 cents.

Strong Momentum

Neenah Paper, which is a momentum play that happens to pay an industry-leading dividend yield of 4%, saw a recent surge in share price, resulting in market outperformance over the past 3 months. Take a look at its 3-month performance in relation to the S&P 500.

Zacks Investment Research
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Read more on Neenah Paper at Wikinvest

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