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Sappi Limited (SPPJY)
OTHER OTC:SPPJY
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Sappi
(OTC:SPPJY)
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Rating:64Neutral
Price Target:
$2.00
▲(52.67% Upside)
Sappi's overall stock score reflects a challenging financial environment with mixed financial performance and negative earnings call sentiment. However, the stock's attractive valuation and slightly positive technical indicators provide some upside potential.
Sappi (SPPJY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$790.04M
Dividend Yield7.81%
Average Volume (3M)17.00
Price to Earnings (P/E)8.2
Beta (1Y)1.06
Revenue Growth2.43%
EPS GrowthN/A
CountryUS
Employees12,329
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-0.05
Shares Outstanding604,641,500
10 Day Avg. Volume0
30 Day Avg. Volume17
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap3.75
Enterprise Value/Revenue0.54
Enterprise Value/Gross Profit4.66
Enterprise Value/Ebitda4.73
Forecast
1Y Price Target
$2.00Price Target Upside52.67% Upside
Rating ConsensusHold
Number of Analyst Covering1
Sappi Business Overview & Revenue Model
Company DescriptionSappi Limited provides materials made from woodfiber-based renewable resources in Europe, North America, and South Africa. The company offers dissolving pulp; graphic papers; packaging and specialty papers, including flexible packaging papers, label papers, functional paper packaging products, containerboards, paperboards, silicone base papers, dye sublimation papers, and inkjet papers; and casting and release papers. It also provides specialty chemicals and food ingredients; generates biomass energy, biogas, and hot water; offers fuel rods; and owns and manages forests. The company was formerly known as South African Pulp and Paper Industries Limited and changed its name to Sappi Limited in 1973. Sappi Limited was founded in 1936 and is headquartered in Johannesburg, South Africa.
How the Company Makes MoneySappi generates revenue primarily through the sale of its wood fiber-based products, which include dissolving wood pulp, paper, and paper products. The company has key revenue streams from its three main segments: Sappi Southern Africa, Sappi Europe, and Sappi North America. Each segment focuses on different markets and product types, allowing Sappi to diversify its income. Additionally, Sappi engages in partnerships and collaborations with various stakeholders in the value chain, enhancing its product offerings and market reach. The demand for sustainable and environmentally friendly products, along with Sappi's emphasis on innovation and efficiency in production, significantly contributes to its earnings.
Sappi Earnings Call Summary
Earnings Call Date:Aug 07, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Negative
The earnings call reflects a challenging quarter with significant financial and operational setbacks, including a substantial decline in EBITDA and increased net debt levels. While there are some positive developments, such as CapEx reduction and market share gains in graphic paper, the negative aspects, including the delayed Somerset PM2 conversion and ongoing European market challenges, dominate the sentiment.Q3-2025 Updates
Positive Updates
CapEx Reduction
CapEx has been reduced to $500 million for the current year and projected to be less than $300 million in 2026 and 2027.
Increase in Graphic Paper Market Share
Sappi has progressively increased its market share in both coated woodfree and coated mechanical paper over the last few quarters by a few percentage points.
Dissolving Pulp Price Recovery
Prices for dissolving pulp have started to rise again, from a low of $798 to $810, with expectations of further recovery.
Negative Updates
Significant Decline in EBITDA
EBITDA dropped to $80 million from $148 million due to lower selling prices and operational disruptions.
Increased Net Debt Levels
Net debt increased to $1.9 billion, with a net debt to adjusted EBITDA ratio of 3.2x, partly due to currency translation effects and strategic investments.
Somerset PM2 Delays and Impact
The Somerset PM2 conversion was completed later than expected, causing a $22 million negative earnings impact and operational disruptions.
Challenging European Market
The European market continues to struggle with oversupply and macroeconomic challenges, with no significant short-term improvement expected.
Company Guidance
During the Sappi Q3 2025 Results Conference Call, CEO Steve Binnie provided guidance on several key metrics. The quarter was marked by a challenging global economic environment, leading to a decline in selling prices, particularly for dissolving pulp, and impacting the company's EBITDA, which came in at $80 million compared to $148 million previously. The completion of the Somerset PM2 conversion delayed production, resulting in a negative earnings impact of $22 million. This, along with increased net debt levels to $1.9 billion and a net debt to adjusted EBITDA ratio of 3.2x, highlighted the financial pressures faced by the company. Sappi aims to reduce its net debt below $1 billion, with strategic projects behind them and a planned reduction in CapEx to below $300 million in 2026. The company has also decided not to declare a dividend in the current year. Despite the challenges, Binnie expressed optimism about the ramp-up of PM2, improving dissolving pulp prices, and cost management efforts, projecting an adjusted EBITDA for Q4 above that of Q3.Sappi Financial Statement Overview
Summary
Sappi's financial performance is mixed, with operational efficiency and a stable balance sheet. However, significant revenue decline and negative free cash flow are concerning, necessitating improvements in profitability and cash flow management.Income Statement
Sappi's income statement shows mixed results. The TTM data indicates a decline in revenue growth rate by 88.4%, which is concerning. However, the company maintains a decent gross profit margin of 13.1% and an EBIT margin of 6.5%, reflecting operational efficiency. The net profit margin is low at 3.2%, indicating room for improvement in profitability.65
Positive
Balance Sheet
The balance sheet reflects a stable financial position with a debt-to-equity ratio of 0.74, indicating moderate leverage. The return on equity is 7.3%, showing reasonable returns for shareholders. The equity ratio stands at 39.4%, suggesting a solid equity base relative to total assets.70
Positive
Cash Flow
Cash flow analysis reveals challenges, with a negative free cash flow and a free cash flow to net income ratio of -1.46, indicating cash flow issues. However, the operating cash flow to net income ratio of 0.20 suggests some ability to generate cash from operations.55
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.50B | 5.46B | 5.81B | 7.30B | 5.26B | 4.61B |
| Gross Profit | 635.00M | 776.00M | 907.00M | 1.37B | 549.00M | 399.00M |
| EBITDA | 626.00M | 497.00M | 731.00M | 1.08B | 444.00M | 283.00M |
| Net Income | 96.00M | 33.00M | 259.00M | 536.00M | 13.00M | -135.00M |
Balance Sheet | ||||||
| Total Assets | 6.23B | 6.21B | 5.80B | 6.23B | 6.19B | 5.46B |
| Cash, Cash Equivalents and Short-Term Investments | 203.00M | 317.00M | 601.00M | 780.00M | 366.00M | 279.00M |
| Total Debt | 2.15B | 1.74B | 1.69B | 1.94B | 2.31B | 2.24B |
| Total Liabilities | 3.78B | 3.63B | 3.35B | 3.87B | 4.22B | 3.82B |
| Stockholders Equity | 2.45B | 2.58B | 2.44B | 2.36B | 1.97B | 1.63B |
Cash Flow | ||||||
| Free Cash Flow | -474.00M | -349.00M | 223.00M | 514.00M | 33.00M | -91.00M |
| Operating Cash Flow | 148.00M | 124.00M | 605.00M | 882.00M | 407.00M | 260.00M |
| Investing Cash Flow | -588.00M | -430.00M | -395.00M | -376.00M | -378.00M | -517.00M |
| Financing Cash Flow | 258.00M | -80.00M | -501.00M | -43.00M | 33.00M | 138.00M |
Sappi Technical Analysis
Negative
1.31
Price Trends
1.56
Negative
1.66
Negative
1.98
Negative
Market Momentum
-0.08
Positive
27.27
Positive
6.64
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPPJY, the sentiment is Negative. The current price of 1.31 is below the 20-day moving average (MA) of 1.52, below the 50-day MA of 1.56, and below the 200-day MA of 1.98, indicating a bearish trend. The MACD of -0.08 indicates Positive momentum. The RSI at 27.27 is Positive, neither overbought nor oversold. The STOCH value of 6.64 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SPPJY.
Sappi Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | 5.90B | 19.99 | 25.13% | 1.30% | -1.44% | -31.12% | |
65 Neutral | 1.74B | 8.26 | 22.73% | 4.18% | -4.03% | -5.27% | |
64 Neutral | $790.04M | 8.19 | 3.92% | 7.81% | 2.43% | ― | |
60 Neutral | 11.57B | 8.24 | -21.91% | 3.57% | 11.48% | 1773.12% | |
59 Neutral | 338.83M | -3.35 | 24.06% | ― | -26.71% | -329.19% | |
43 Neutral | 182.86M | -1.67 | -24.47% | 10.99% | -2.16% | 44.89% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% |
* Basic Materials Sector Average
Performance Comparison
SPPJY
Sappi
1.31
-1.38
-51.30%
CLW
Clearwater Paper
21.04
-7.50
-26.28%
LPX
Louisiana-Pacific
84.72
-21.58
-20.30%
MERC
Mercer International
2.73
-3.74
-57.81%
SUZ
Suzano Papel e Celulose SA
9.24
-0.50
-5.13%
SLVM
Sylvamo Corp
43.06
-40.44
-48.43%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.