Zacks Investment Research downgraded KapStone Paper and Packaging Corporation (KS) to a Zacks Rank #5 (Strong Sell) on Dec 5, 2014. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of performing worse than the broader market.
Why the Downgrade?
Investors’ sentiments have been weak since KapStone Paper and Packaging Corporation reported weaker-than-expected results for third-quarter 2014 on Oct 29. Earnings of 59 cents per share came 11.9% below the Zacks Consensus Estimate of 67 cents.
Revenue growth of 11% were partially offset by increases of 10.3% increase in cost of sales, 22.7% in depreciation and amortization and 16.4% in selling, general and administrative expenses. Foreign exchange losses impaired earnings by $960 million.
Dismal performance in third-quarter 2014 led to downward revisions in earnings estimates for KapStone Paper and Packaging Corporation. Over the last 60 days, the Zacks Consensus has decreased by 5.5% to $2.05 for 2014 and by 5.7% to $2.33 for 2015.
Other Stocks to Consider
KapStone Paper and Packaging Corporation currently has a $2.9 billion market capitalization. Some better-ranked stocks in the paper and related products industry include Mercer International Inc. (MERC), Veritiv Corporation (VRTV) and Wausau Paper Corp. (WPP). While both Mercer International and Veritiv Corporation sport a Zacks Rank #1 (Strong Buy), Wausau Paper carries a Zacks Rank #2 (Buy).
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