Boise Inc.:Value Stock Or Value Trap?

Boise Inc.

Introduction:

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Boise Inc. (NYSE:BZ) manufactures paper and packaging. The Company produces copy, commercial printing, newsprint, premium and specialty papers, and market pulp, and corrugated containers and containerboard. Boise Inc. was founded in 2007 and is headquartered in Boise, Idaho.

Stock Snapshot:

As of Nov 29’ 2012, the stock for Boise Inc. (NYSE:BZ) stood at USD 8.13, representing a total market capitalization of USD 821.17 million. The stock has traded between a range of USD 5.76 and USD 9.18 over the last 52 weeks. The stock has witnessed an average volume of 686,290 shares over the last 3 months.

Major Competitors:

Mondi Plc (LON:MNDI) operates as an international paper and packaging company worldwide. It principally engages in the manufacture and sale of packaging paper, converted packaging products, and uncoated fine paper (UFP) products. The stock for Mondi plc stood at GBP641.50 as of 29^th Nov’ 2012; representing total market capitalization of GBP 3.10 billion. The stock has traded between a range of GBP 426.1 and GBP 683.5 over the last 52 weeks. The stock has witnessed an average volume of 867,685 shares over the last 3 months.

Ballarpur Industries Limited (NSE:BALLARPUR) engages in the manufacture, sale, and export of paper and paper products in India and internationally. The stock for Ballarpur Industries Limited stood at INR 23.65 as of 29^th Nov’ 2012; representing total market capitalization of INR 15.43 billion. The stock has traded between a range of INR 17.5 and INR 26.4 over the last 52 weeks. The stock has witnessed an average volume of 260,570 shares over the last 3 months.

Multiple Analysis:

The stock for Boise Inc. (NYSE:BZ) has been trading at a price to earnings ratio of 15.44, a price to sales ratio of 0.32, and a price to book ratio of 1.03. In comparison, the stock for Mondi Plc (LON:MNDI) has been trading at a price to earnings ratio of 893.4, a price to sales ratio of 42.65, and a price to book ratio of 95.6; whereas the stock for Ballarpur Industries Limited has been trading at a price to earnings ratio of 12.37, a price to book ratio of 0.39, and a price to sales ratio of 0.32.

Financial Highlights:

For 9MFY20112, the company recorded total sales of USD 1,927.9 million, as compared to USD 1,803.6 million in the corresponding period last year; registering a YoY increase of 7%. The sales increased as a result of the Company’s acquisitions of Tharco and Hexacomb, which increased sales in the Company’s packaging set. The sales increase was partially offset by lower sales volume and prices for market pulp in the Company’s paper segment.
For 9MFY12, materials, labor, and other operating expenses, including the cost of fiber from related parties, increased to USD 1,527.2 million, as compared with USD 1,431.6 million for the corresponding period last year.
For 9MFY12, the Company reported net income of USD 38.6 million as compared to USD 59 million; registering a YoY decrease of 32%. Net income per diluted share was registered at USD 0.38, as compared to a net income per diluted share of USD 0.55 over the corresponding period last year.
During the 9MFY12,the Company generated USD 165.3 million of cash from operations and paid USD 47.5 million to its shareholders through a special dividend. The Company also paid back USD 25.0 million of long-term debt payments; USD 17.5 million of which were voluntary and eliminated the Company’s required principal payment obligations until December 31, 2013.

Factors to Watch Out For: