MERCER INTERNATIONAL INC (MERC) Stock Fundamental Analysis
NASDAQ:MERC - Nasdaq - US5880561015 - Common Stock - Currency: USD
We assign a fundamental rating of 3 out of 10 to MERC. MERC was compared to 9 industry peers in the Paper & Forest Products industry. MERC may be in some trouble as it scores bad on both profitability and health. MERC is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
MERC had negative earnings in the past year.
In the past year MERC had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: MERC reported negative net income in multiple years.
Of the past 5 years MERC 4 years had a positive operating cash flow.
1.2 Ratios
MERC has a Return On Assets (-3.89%) which is in line with its industry peers.
MERC's Return On Equity of -20.76% is on the low side compared to the rest of the industry. MERC is outperformed by 66.67% of its industry peers.
The Return On Invested Capital of MERC (2.54%) is better than 66.67% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -3.89% | ||
| ROE | -20.76% | ||
| ROIC | 2.54% |
ROA(3y)-1.26%
ROA(5y)0.54%
ROE(3y)-9.49%
ROE(5y)-1.34%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
The Operating Margin of MERC (3.28%) is better than 66.67% of its industry peers.
MERC's Operating Margin has declined in the last couple of years.
MERC's Gross Margin of 9.01% is on the low side compared to the rest of the industry. MERC is outperformed by 66.67% of its industry peers.
In the last couple of years the Gross Margin of MERC has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.28% | ||
| PM (TTM) | N/A | ||
| GM | 9.01% |
OM growth 3Y-40.69%
OM growth 5Y-5.03%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-25.62%
GM growth 5Y-0.06%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so MERC is destroying value.
Compared to 1 year ago, MERC has more shares outstanding
Compared to 5 years ago, MERC has more shares outstanding
The debt/assets ratio for MERC is higher compared to a year ago.
2.2 Solvency
Based on the Altman-Z score of 1.49, we must say that MERC is in the distress zone and has some risk of bankruptcy.
With a Altman-Z score value of 1.49, MERC perfoms like the industry average, outperforming 44.44% of the companies in the same industry.
MERC has a debt to FCF ratio of 49.66. This is a negative value and a sign of low solvency as MERC would need 49.66 years to pay back of all of its debts.
The Debt to FCF ratio of MERC (49.66) is comparable to the rest of the industry.
A Debt/Equity ratio of 3.44 is on the high side and indicates that MERC has dependencies on debt financing.
MERC's Debt to Equity ratio of 3.44 is on the low side compared to the rest of the industry. MERC is outperformed by 88.89% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.44 | ||
| Debt/FCF | 49.66 | ||
| Altman-Z | 1.49 |
ROIC/WACC0.38
WACC6.62%
2.3 Liquidity
MERC has a Current Ratio of 3.25. This indicates that MERC is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of MERC (3.25) is better than 100.00% of its industry peers.
MERC has a Quick Ratio of 1.98. This is a normal value and indicates that MERC is financially healthy and should not expect problems in meeting its short term obligations.
MERC has a better Quick ratio (1.98) than 100.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.25 | ||
| Quick Ratio | 1.98 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 67.70% over the past year.
MERC shows a decrease in Revenue. In the last year, the revenue decreased by -1.37%.
Measured over the past years, MERC shows a small growth in Revenue. The Revenue has been growing by 4.70% on average per year.
EPS 1Y (TTM)67.7%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%-430%
Revenue 1Y (TTM)-1.37%
Revenue growth 3Y4.25%
Revenue growth 5Y4.7%
Sales Q2Q%-8.39%
3.2 Future
Based on estimates for the next years, MERC will show a very strong growth in Earnings Per Share. The EPS will grow by 29.83% on average per year.
MERC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.02% yearly.
EPS Next Y-35.79%
EPS Next 2Y44.98%
EPS Next 3Y83.66%
EPS Next 5Y29.83%
Revenue Next Year-0.05%
Revenue Next 2Y2.99%
Revenue Next 3Y10.02%
Revenue Next 5YN/A
3.3 Evolution
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
MERC reported negative earnings for the last year, which makes the Price/Earnings Ratio negative.
With a Price/Forward Earnings ratio of 87.50, MERC can be considered very expensive at the moment.
The rest of the industry has a similar Price/Forward Earnings ratio as MERC.
The average S&P500 Price/Forward Earnings ratio is at 21.76. MERC is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | N/A | ||
| Fwd PE | 87.5 |
4.2 Price Multiples
66.67% of the companies in the same industry are more expensive than MERC, based on the Enterprise Value to EBITDA ratio.
77.78% of the companies in the same industry are more expensive than MERC, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 7.83 | ||
| EV/EBITDA | 6.69 |
4.3 Compensation for Growth
A more expensive valuation may be justified as MERC's earnings are expected to grow with 83.66% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y44.98%
EPS Next 3Y83.66%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 7.52%, MERC is a good candidate for dividend investing.
In the last 3 months the price of MERC has falen by -53.58%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
Compared to an average industry Dividend Yield of 2.99, MERC pays a better dividend. On top of this MERC pays more dividend than 100.00% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.36, MERC pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 7.52% |
5.2 History
The dividend of MERC decreases each year by -11.04%.
MERC has been paying a dividend for at least 10 years, so it has a reliable track record.
MERC has not decreased its dividend in the last 3 years.
Dividend Growth(5Y)-11.04%
Div Incr Years1
Div Non Decr Years3
5.3 Sustainability
MERC has negative earnings and hence a negative payout ratio. The dividend may be in danger.
DP-22.1%
EPS Next 2Y44.98%
EPS Next 3Y83.66%
3.57
-0.14 (-3.77%)
Chartmill FA Rating
GICS SectorMaterials
GICS IndustryGroupMaterials
GICS IndustryPaper & Forest Products
Earnings (Last)
Earnings (Next)
Inst Owners50.5%
Inst Owner Change-0.58%
Ins Owners1.15%
Ins Owner Change-0.25%
Market Cap238.73M
Analysts48.89
Price Target4.85 (35.85%)
Short Float %2.53%
Short Ratio1.85
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 7.52% |
Yearly Dividend0.3
Dividend Growth(5Y)-11.04%
DP-22.1%
Div Incr Years1
Div Non Decr Years3
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)196.08%
Min EPS beat(2)-120.58%
Max EPS beat(2)512.75%
EPS beat(4)1
Avg EPS beat(4)-7.26%
Min EPS beat(4)-405.89%
Max EPS beat(4)512.75%
EPS beat(8)3
Avg EPS beat(8)5.2%
EPS beat(12)5
Avg EPS beat(12)-28.82%
EPS beat(16)8
Avg EPS beat(16)-18.99%
Revenue beat(2)0
Avg Revenue beat(2)-2.96%
Min Revenue beat(2)-3.75%
Max Revenue beat(2)-2.16%
Revenue beat(4)2
Avg Revenue beat(4)-0.55%
Min Revenue beat(4)-3.75%
Max Revenue beat(4)2.23%
Revenue beat(8)5
Avg Revenue beat(8)1.93%
Revenue beat(12)8
Avg Revenue beat(12)2.55%
Revenue beat(16)10
Avg Revenue beat(16)2.04%
PT rev (1m)-35.59%
PT rev (3m)-32.14%
EPS NQ rev (1m)-100%
EPS NQ rev (3m)-100%
EPS NY rev (1m)-2562.5%
EPS NY rev (3m)-161.89%
Revenue NQ rev (1m)-1.91%
Revenue NQ rev (3m)-2%
Revenue NY rev (1m)-0.81%
Revenue NY rev (3m)-0.9%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | N/A | ||
| Fwd PE | 87.5 | ||
| P/S | 0.12 | ||
| P/FCF | 7.83 | ||
| P/OCF | 2.05 | ||
| P/B | 0.55 | ||
| P/tB | 0.62 | ||
| EV/EBITDA | 6.69 |
EPS(TTM)-0.83
EYN/A
EPS(NY)0.04
Fwd EY1.14%
FCF(TTM)0.46
FCFY12.76%
OCF(TTM)1.74
OCFY48.76%
SpS29.86
BVpS6.54
TBVpS5.79
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -3.89% | ||
| ROE | -20.76% | ||
| ROCE | 3.21% | ||
| ROIC | 2.54% | ||
| ROICexc | 2.79% | ||
| ROICexgc | 2.86% | ||
| OM | 3.28% | ||
| PM (TTM) | N/A | ||
| GM | 9.01% | ||
| FCFM | 1.53% |
ROA(3y)-1.26%
ROA(5y)0.54%
ROE(3y)-9.49%
ROE(5y)-1.34%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3Y-39.32%
ROICexcg growth 5Y-5.08%
ROICexc growth 3Y-39.31%
ROICexc growth 5Y-4.89%
OM growth 3Y-40.69%
OM growth 5Y-5.03%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-25.62%
GM growth 5Y-0.06%
F-Score5
Asset Turnover0.85
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 3.44 | ||
| Debt/FCF | 49.66 | ||
| Debt/EBITDA | 6.36 | ||
| Cap/Depr | 50.33% | ||
| Cap/Sales | 4.3% | ||
| Interest Coverage | 0.68 | ||
| Cash Conversion | 49.28% | ||
| Profit Quality | N/A | ||
| Current Ratio | 3.25 | ||
| Quick Ratio | 1.98 | ||
| Altman-Z | 1.49 |
F-Score5
WACC6.62%
ROIC/WACC0.38
Cap/Depr(3y)84.22%
Cap/Depr(5y)87.15%
Cap/Sales(3y)6.27%
Cap/Sales(5y)6.66%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)67.7%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%-430%
EPS Next Y-35.79%
EPS Next 2Y44.98%
EPS Next 3Y83.66%
EPS Next 5Y29.83%
Revenue 1Y (TTM)-1.37%
Revenue growth 3Y4.25%
Revenue growth 5Y4.7%
Sales Q2Q%-8.39%
Revenue Next Year-0.05%
Revenue Next 2Y2.99%
Revenue Next 3Y10.02%
Revenue Next 5YN/A
EBIT growth 1Y246.72%
EBIT growth 3Y-38.17%
EBIT growth 5Y-0.57%
EBIT Next Year1987.88%
EBIT Next 3Y215.65%
EBIT Next 5Y117.71%
FCF growth 1Y-51.63%
FCF growth 3Y-34.97%
FCF growth 5Y-44.48%
OCF growth 1Y-51.94%
OCF growth 3Y-20.89%
OCF growth 5Y-18.07%