Mercer International (MERC) AI Stock Analysis

• Market Cap: $126.60M
• Dividend Yield: 10.77%
• Average Volume (3M): 591.64K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.48
• 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): -4.61
• Shares Outstanding: 66,982,506
• 10 Day Avg. Volume: 297,226
• 30 Day Avg. Volume: 591,638
• PEG Ratio: >-0.01
• Price to Book (P/B): 1.95
• Price to Sales (P/S): 0.07
• P/FCF Ratio: -1.66
• Enterprise Value/Market Cap: 12.22
• Enterprise Value/Revenue: 0.83
• Enterprise Value/Gross Profit: -54.90
• Enterprise Value/Ebitda: 228.61
• 1Y Price Target: $1.83
• Price Target Upside: -0.54% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 3
• EPS Forecast (FY): -1.87
• Revenue Forecast (FY): $2.08B

• Rating: 44 Neutral
• Price Target: $2.00 ▲(8.70% Upside)
• Action: Reiterated Date: 02/14/26
• Date: Action: Reiterated 02/14/26

The score is held down primarily by materially weakened financial performance (large losses, negative margins, and extreme leverage) and bearish technical signals. Valuation is mixed due to a negative P/E (losses) despite a high dividend yield, while the earnings call shows operational initiatives and liquidity focus but highlights substantial near-term headwinds and cash needs.

Positive Factors

One Goal 100 cost program

Realizing $30M of targeted $100M savings demonstrates credible execution on structural cost reduction. Sustained savings reduce cash burn and improve operating leverage, helping margins recover if volumes or prices stabilize and lowering the break‑even pulp price over the medium term.

Strengthened liquidity position

A $430M liquidity buffer provides meaningful runway to fund working capital, planned maintenance CapEx and interest obligations while management executes restructuring. This reduces near‑term solvency stress and gives time to implement strategic initiatives without immediate forced asset sales.

Growing mass timber backlog

A rapidly expanding mass timber backlog diversifies revenue away from cyclical pulp markets into higher‑value construction products. Predictable booked revenue in 2026 supports cash flow visibility, leverages existing fiber supply, and can enhance margins and long‑term revenue mix stability if execution continues.

Negative Factors

Large non‑cash impairments

A $216M impairment signals that expected future cash flows from core assets have materially declined. This permanently erodes equity and reduces balance sheet flexibility, increases perceived risk among creditors and investors, and constrains the firm's ability to support capital investment or withstand prolonged market weakness.

Extremely elevated leverage / equity erosion

Severely weakened equity and high leverage amplify refinancing and covenant risk, raise effective interest burdens, and limit capacity for strategic investments. In cyclical pulp markets, elevated leverage materially increases probability of asset sales, dilutive capital raises, or distressed restructuring under prolonged price or volume pressure.

Unstable cash generation; 2026 net cash outflow risk

Operating cashflow has been inconsistent and FCF turned meaningfully negative; anticipated higher fiber costs, interest cash of ~$120M and a possible $100–150M working capital outflow create a tangible funding gap. This elevates near‑to‑medium term refinancing or liquidity execution risk.

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

Financials are highly stressed: profitability has swung to large losses with negative margins, leverage is extremely elevated as equity eroded, and cash flow remains unstable with negative free cash flow despite recently positive operating cash flow.

Income Statement

Profitability has deteriorated materially. After strong earnings in 2021–2022 (double-digit net margins), results swung to large losses in 2023–2025, with 2025 showing negative gross profit and deeply negative operating and net margins. Revenue has also been choppy, declining in 2023 and again in 2025, indicating weaker pricing and/or volumes and limited ability to absorb costs.

Balance Sheet

Leverage and equity erosion are the core issues. Total debt remains very high while equity has collapsed by 2025, driving debt-to-equity to extremely elevated levels and reflecting significant balance sheet strain. Returns on equity are sharply negative in recent years, consistent with ongoing losses and a reduced capital cushion.

Cash Flow

Cash generation is inconsistent and has weakened alongside earnings. Operating cash flow rebounded to positive in 2024–2025, but 2025 operating cash flow is minimal relative to the loss, and free cash flow is meaningfully negative again. The business demonstrated the ability to generate strong cash in 2021–2022, but recent cash flows do not yet show a stable recovery.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.87B	2.04B	1.99B	2.28B	1.80B
Gross Profit	-67.63M	189.36M	-31.86M	498.20M	425.52M
EBITDA	-22.02M	15.01M	-9.07M	560.96M	478.78M
Net Income	-497.89M	-85.14M	-242.06M	247.04M	170.99M
Balance Sheet
Total Assets	2.04B	2.26B	2.66B	2.73B	2.35B
Cash, Cash Equivalents and Short-Term Investments	186.81M	184.93M	313.99M	354.03M	345.61M
Total Debt	1.61B	1.49B	1.63B	1.37B	1.26B
Total Liabilities	1.97B	1.83B	2.03B	1.89B	1.66B
Stockholders Equity	68.06M	429.77M	635.41M	838.78M	694.02M
Cash Flow
Free Cash Flow	-80.00M	5.89M	-205.33M	181.92M	21.39M
Operating Cash Flow	8.59M	90.20M	-69.00M	360.66M	182.21M
Investing Cash Flow	-81.33M	-66.99M	-199.87M	-424.61M	-187.13M
Financing Cash Flow	79.81M	-152.78M	228.62M	80.90M	-9.50M

Mercer International Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.84
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MERC, the sentiment is Negative. The current price of 1.84 is below the 20-day moving average (MA) of 1.91, below the 50-day MA of 2.11, and below the 200-day MA of 2.76, indicating a bearish trend. The MACD of -0.06 indicates Negative momentum. The RSI at 43.03 is Neutral, neither overbought nor oversold. The STOCH value of 51.46 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MERC.

Mercer International Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$10.43B	7.12	-0.05%	2.87%	2.86%	-36.73%
SLVM	56 Neutral	$1.83B	14.26	14.56%	3.51%	-8.92%	-32.30%
MATV	52 Neutral	$592.20M	-1.76	-49.79%	3.26%	0.39%	-505.56%
MERC	44 Neutral	$126.60M	-0.25	-39.37%	10.77%	-5.85%	9.13%
CLW	44 Neutral	$230.63M	-11.34	-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.