- Neenah Paper beat expectations for revenue and matched expectations on earnings.
- This confirms my thesis that the company has strong growth.
- I did anticipate the company to perform well with regard to earnings in my last article.
Neenah Paper (NYSE:NP) beat expectations for Q2 2014 on the top and bottom lines. Revenue increased 8.5% year-over-year to $230.4 million, beating expectations by $6.1 million. Adjusted EPS increased 12.5% to $0.90, which beat expectations by $0.06. Cash from operations increased 34% to $37.1 million. This impressive performance confirms my bullish thesis on Neenah from my previous article on the company, written a little over a year ago. The stock increased from about $32 when the article was written to the current price of over $50, representing a 56% gain.
Net sales for the Technical Products segment increased 10% to $116.9 million. Each component of this segment increased sales in Q2. Filtration increased 9%, Backings increased 9%, and Specialties increased 13%. The higher sales were a result of increased volume and favorable currency effects offset by slightly lower prices.
Net sales for the Fine Paper segment increased 7% to $106.6 million. This gain resulted from higher volumes and slightly higher prices. Growth was achieved in core premium brands, premium packaging, digital grades, and international sales. Overall, it was an excellent quarter for Neenah Paper. The stock is still attractively valued as it trades at 14 times next year's expected earnings as compared to the S&P 500's forward PE of 16.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.