Q2: BIG EPS Beat on expanding margins & BV with a BLX Kicker Great Q. They are beginning to pull through cost synergies and efficiencies to the bottom line. In the first 6 months of the year they have already earned $1.14/share which is essentially what they earned last year over the course of the entire year. Add another 0.50/share for Q3 and a breakeven Q4 and you get 2016 earnings of 1.65/share. That means we are only trading at 5.5x 2016 earnings, so cheap.
Operationally the quarter was pretty flawless, expanding gross margin, operating margin, EBITDA margin and profit margin. Can’t beat that. Throw in the additional debt reduction QoQ and decreased interest expense of which will add at least another 12M of annualized profit to the bottom and the debt reduction will just going to accelerate going forward as cash flow continues to grow.
I don’t understand how a stock like this trades at a discount to book value as it continues to grow earnings and Book Value. Q2 2016 BV/share of 9.59 (Q2 2015 BV/share of 9.39).
Just a Reminder: Cascades owns a 20% equity stake in Boralex which has been soaring higher and their stake is now worth 258M or 2.68/share of Cascades. So you are essentially buying the underlying business of Cascades for 6.60/share which equates to 0.67x BV or 4x P/E.
Great company that continues to execute and grow earnings and book value.