- First, with the Scapa deal, SWM continues to grow inorganically, transforming itself into a more cyclical company and reducing the impact of tobacco-related revenues.
- Second, in the wake of the deal, its net debt has risen meteorically, creating an enterprise value problem.
- Third, unexpectedly tight supply and inflation had adversely impacted margins; as a consequence, the net operating cash flow dropped to a 5-year low.
- Fourth, despite all these, the stock's intrinsic value is still grossly above the current price. In the base case that assumes a rather weak operating cash flow margin, the stock is ~30% undervalued.
For further details see:
Schweitzer-Mauduit: 4 Things Investors Should Pay Attention To After Earnings