Mercer International (MERC) AI Stock Analysis

• Market Cap: $183.53M
• Dividend Yield: 10.77%
• Average Volume (3M): 591.64K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.40
• Revenue Growth: -5.85%
• EPS Growth: 9.13%
• Country: US
• Employees: 3,580
• Sector: Basic Materials
• Sector Strength: 58
• Industry: Paper, Lumber & Forest Products
• EPS (TTM): -1.21
• Shares Outstanding: 66,982,506
• 10 Day Avg. Volume: 297,226
• 30 Day Avg. Volume: 591,638
• PEG Ratio: 0.08
• Price to Book (P/B): 1.01
• Price to Sales (P/S): 0.21
• P/FCF Ratio: 73.79
• Enterprise Value/Market Cap: 7.93
• Enterprise Value/Revenue: 0.76
• Enterprise Value/Gross Profit: 17.06
• Enterprise Value/Ebitda: 11.72
• 1Y Price Target: $2.00
• Price Target Upside: -21.57% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 49 Neutral
• Price Target: $2.50 ▼(-1.96% Downside)

The score is held down primarily by weak financial performance (negative profitability, high leverage, and negative free cash flow) and a challenging earnings outlook highlighted by continued losses and pricing headwinds. Technicals provide some support via improving short-term trend, but overbought signals add risk, while valuation is mixed due to a high yield alongside loss-making results.

Positive Factors

Diversified Revenue Streams

Mercer sells pulp, lumber and biomass-generated energy across domestic and international markets and holds long-term industrial contracts. This multi-product, multi-region model provides structural demand diversification that smooths cash flows and reduces reliance on any single market over months to years.

Strong Liquidity Cushion

The $376M liquidity pool (about $98M cash and $278M undrawn revolvers) gives Mercer a meaningful runway to absorb cyclical revenue shocks, fund critical maintenance and projects, and execute operational improvements without immediate refinancing, lowering short-to-medium-term solvency risk.

Decarbonization Pilot Provides Strategic Optionality

The carbon capture demonstration is a structural initiative to test emissions reductions on biogenic flue gas. If scalable, it could materially reduce future compliance costs, meet tightening customer/regulatory expectations, and create long-term competitive differentiation in an emissions-sensitive market.

Negative Factors

Very High Leverage

A debt-to-equity ratio above 4 materially limits financial flexibility. In a cyclical commodity business, elevated leverage amplifies the impact of price downturns, raises refinancing and covenant risks, and constrains the company's ability to invest strategically or accelerate deleveraging without improving operations.

Negative Free Cash Flow

Sustained negative free cash flow indicates operations are not generating surplus cash to fund capex, debt reduction or dividend support. Even with improving FCF growth, persistent negative cash conversion undermines balance sheet repair and limits capacity to self-fund growth or weather prolonged market weakness.

Persistent Operating Losses and Margin Pressure

Ongoing negative EBITDA and net losses, driven by lower pulp/lumber prices, high fiber costs and a $20M inventory impairment, reflect structural margin pressure. Continued losses erode equity, hinder reinvestment, and make achieving durable profitability and reducing leverage more difficult over the medium term.

Mercer International Business Overview & Revenue Model

Company Description

Mercer International Inc., together with its subsidiaries, manufactures and sells northern bleached softwood kraft (NBSK) pulp in Europe, the United States, Asia, and internationally. The company operates through two segments, Pulp and Wood Products. It also generates and sells green energy produced from biomass cogeneration power plant to third party utilities. In addition, the company manufactures, distributes, and sells lumber and other wood residuals. Further, it produces NBSK pulp primarily from wood chips, pulp logs, and sawlogs; carbon neutral or green energy using carbon-neutral bio-fuels, such as black liquor and wood waste; and tall oil for use as a chemical additive and green energy source. The company sells its pulp to tissue, specialty paper, and printing and writing paper, and other manufacturers; and lumber products to distributors, construction firms, secondary manufacturers, retail yards, and home centers. Mercer International Inc. was founded in 1968 and is headquartered in Vancouver, Canada.

How the Company Makes Money

Mercer International generates revenue primarily through the sale of its wood-based products, including market pulp, which is used in the production of paper and other products. The company benefits from a diversified revenue model, with significant income derived from both domestic and international markets. Key revenue streams include sales from its pulp mills, lumber production, and energy generation from biomass. Additionally, Mercer engages in strategic partnerships and long-term contracts with industrial customers, securing stable demand for its products. Factors contributing to its earnings include fluctuations in global pulp prices, demand for wood products, and operational efficiencies achieved through advanced manufacturing processes.

Mercer International Financial Statement Overview

Summary

Mercer International is facing financial challenges with declining revenues, negative profitability margins, and high leverage. While there are some improvements in cash flow growth, the company needs to address operational inefficiencies and manage its debt levels to stabilize its financial position.

Income Statement

Mercer International's income statement shows a challenging period with declining revenue growth and negative net profit margins in the TTM. The gross profit margin has significantly decreased from previous years, indicating cost pressures or pricing challenges. The EBIT and EBITDA margins are also negative, reflecting operational inefficiencies or market conditions impacting profitability.

Balance Sheet

The balance sheet reveals high leverage with a debt-to-equity ratio exceeding 4 in the TTM, which poses financial risk. The return on equity is negative, indicating losses relative to shareholder equity. However, the equity ratio remains stable, suggesting a reasonable proportion of equity financing relative to total assets.

Cash Flow

Cash flow analysis highlights negative free cash flow in the TTM, although there is a notable improvement in free cash flow growth. The operating cash flow to net income ratio is low, indicating challenges in converting income into cash. The free cash flow to net income ratio is negative, reflecting cash flow difficulties.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.91B	2.04B	1.99B	2.28B	1.80B	1.42B
Gross Profit	85.31M	189.36M	-31.86M	498.20M	425.52M	130.60M
EBITDA	124.23M	15.01M	-9.07M	560.96M	478.78M	192.65M
Net Income	-172.48M	-85.14M	-242.06M	247.04M	170.99M	-17.23M
Balance Sheet
Total Assets	2.29B	2.26B	2.66B	2.73B	2.35B	2.13B
Cash, Cash Equivalents and Short-Term Investments	98.10M	184.93M	313.99M	354.03M	345.61M	361.10M
Total Debt	1.57B	1.49B	1.63B	1.37B	1.26B	1.21B
Total Liabilities	1.93B	1.83B	2.03B	1.89B	1.66B	1.53B
Stockholders Equity	359.53M	429.77M	635.41M	838.78M	694.02M	601.03M
Cash Flow
Free Cash Flow	-61.55M	5.89M	-205.33M	181.92M	21.39M	-37.60M
Operating Cash Flow	33.59M	90.20M	-69.00M	360.66M	182.21M	41.56M
Investing Cash Flow	-76.70M	-66.99M	-199.87M	-424.61M	-187.13M	-59.83M
Financing Cash Flow	-92.12M	-152.78M	228.62M	80.90M	-9.50M	26.32M

Mercer International Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 2.55
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MERC, the sentiment is Positive. The current price of 2.55 is above the 20-day moving average (MA) of 2.22, above the 50-day MA of 1.96, and below the 200-day MA of 3.11, indicating a neutral trend. The MACD of 0.19 indicates Negative momentum. The RSI at 78.95 is Negative, neither overbought nor oversold. The STOCH value of 92.92 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MERC.

Mercer International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SLVM	69 Neutral	$2.06B	11.99	18.81%	3.51%	-8.92%	-32.30%
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
MATV	58 Neutral	$716.87M	-1.57	-68.33%	3.26%	0.39%	-505.56%
MERC	49 Neutral	$183.53M	-1.08	-39.37%	10.77%	-5.85%	9.13%
CLW	46 Neutral	$329.43M	-2.02	-10.47%	―	-21.76%	-1214.73%

Mercer International Corporate Events

Mercer International launches carbon capture pilot at pulp mill

On December 18, 2025, Mercer International announced that its subsidiary Mercer Peace River Pulp Ltd. and Svante Technologies Inc. have begun operating a carbon dioxide capture demonstration unit at the Mercer Peace River pulp mill in northern Alberta, marking the start of a six‑month pilot project to test Svante’s solid sorbent technology on biogenic CO₂ emissions from the mill’s recovery boiler flue gas. The demonstration follows completion of a front‑end engineering and design phase and is intended to generate technical and operational data to guide the next engineering stages, assess the decarbonization potential for Mercer’s pulp operations and evaluate the broader commercial viability of carbon capture in the pulp and paper industry, with any further project scale‑up contingent on the pilot results and other economic, technical and commercial factors.

The most recent analyst rating on (MERC) stock is a Hold with a $2.00 price target. To see the full list of analyst forecasts on Mercer International stock, see the MERC Stock Forecast page.