Even though the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY) are off for the year, Clearwater Paper (NYSE: CLW) continues to soar. Today it was leading gainer due to a strong earnings report and stock buyback announcement. It is up double digits for the last week, month, quarter, six months, and year of market action. For 2014, Clearwater Paper has risen by 19.50 percent.
By contrast, Kimberly-Clark Corporation (NYSE: KMB) is down for the last week and quarter of trading.
The question for investors becomes will Clearwater Paper continue to soar? The company has been profitable for the last five years. That period includes The Great Recession. More than 80 percent of Clearwater’s sales are through grocery stores, which have a solid base of customers.
Earnings per share is on a bullish trend for Clearwater. Over the past five years, it was just under 20 percent. This year, it is 63.90 percent. Next year, earnings-per-share growth for Clearwater is predicted to by over 130 percent by the analyst community.
Clearwater just announced a $100 million stock buyback program.
That came along with the reporting of fourth quarter earnings. Net sales and net earnings were both higher than for the fourth quarter of 2012. About this, Linda Massman, the President and Chief Executive Officer stated, “Strong fourth-quarter performance reflects the strength of the company’s team to succeed despite the high level of competition in the marketplace. The Pulp and Paperboard division also generated a record $43.2 million in Adjusted EBITDA.”
At around $62.75, Clearwater Corporation is well above the analyst target price of $60.50 a share.
There could be a drop in the price, as it was up more than 10 percent today. The stock price for Clearwater could “revert to the mean,” which is when it returns back to the most efficient level after an event. A strong earnings report or a negative event can send the price of a stock up or down, depending on the nature of the event. When it reverts to the mean, those positioned accordingly will profit.