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Schweitzer-Mauduit International: Undervalued Special Materials Stock

Mar. 04, 2020 9:12 PM ETMativ Holdings, Inc. (MATV) Stock6 Comments
Cash-Centered Creep profile picture
Cash-Centered Creep


  • Schweitzer-Mauduit International is undergoing a transition from tobacco products to special materials.
  • It offers a sustainable dividend with a 5%+ yield.
  • It currently trades at a 12% discount.

Schweitzer-Mauduit International (SWM) is an undercovered gem that has been a reliable dividend stock for its current shareholders, and it is currently trading at a valuation that permits prospective shareholders to get this stock at a bargain price.

Schweitzer-Mauduit International started out as a paper mill in Renaissance-era France. Image provided by Schweitzer-Mauduit International.

From its humble beginnings in 1545 as a French paper mill, Schweitzer-Mauduit International today is a provider of engineered paper solutions and advanced materials, and divides its operations between these two sections. The engineered paper segment sells cigarette paper and reconstituted tobacco leaf to manufacturers of cigars and cigarettes, while the advanced materials segment makes resin-based films, nets, and related products which have applications in construction, filtration, industrial and medical fields. That the business model is a viable one was confirmed again when the Alpharetta, Georgia-based firm recently released its Q4 and full-year results for the 2019 financial year, which continued a trend of consistently rising revenue that has been evident over previous years.

Year Revenue ($) Net Income ($)
2015 775.2 million 90 million
2016 845.8 million 82.3 million
2017 981.7 million 34 million
2018 1.04 billion 94.2 million
2019 1.02 billion 85.8 million

Figures collated from annual reports available on Schweitzer-Mauduit International's investor relations page.

Net income figures have been relatively steady in the same period with the exception of 2017, which was affected by the Tax Cut and Jobs Act being signed into law in December 2017. As a consequence, Schweitzer-Mauduit International had to pay a one-time, non-cash tax expense of $40 million. Subsequent figures testify to the one-time nature of this drop.

Going forward, Schweitzer-Mauduit International is pursuing diversification away from tobacco-related sales and more towards special materials. In December 2013 it acquired metal and plastic component manufacturer

This article was written by

Cash-Centered Creep profile picture
Buy and hold, common stock investor focused on dividends and on value. Interested in various stocks that are suitable for long-term dividend investment. A Buffett admirer, but not a Buffett cultist, and not quite as creepy as my name implies - though certainly cash-centered!

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Comments (6)

LynchFollower profile picture
they make metblown cloth, which is used for surgical masks and N95 masks that are in high demand. in China the price of metblown cloth went up 20 times before the government cracked it down. all the manufacturers' capacities are completely sold out.
LynchFollower profile picture
metblown cloth is the key ingredient in the masks. the price went up to 20K RMB/ ton to 40K RMB/ ton, and you still cannot get it until end of April.
Pepsiguy5 profile picture
One of my longest held and favorite companies. Thanks for the article. Nice to see any coverage of swm.
@Pepsiguy5 I wonder if you hold this dud now and if so, do you feel the same now
Pepsiguy5 profile picture
@justanopion I do still hold it. Same few hundred shares I've had for years now. Its definately been a tough stretch here for a few months. I'm sure they'll be OK. Not to attempt to pass myself off as an expert but I think raw material costs have hurt them more than a lot of businesses this year.
Praveen_Chawla profile picture
Thanks for bringing this idea forward. How economically sensitive is this company given that we may be headed for a recession?
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