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Sappi Limited (SPPJY)
OTHER OTC:SPPJY
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Sappi (SPPJY) AI Stock Analysis

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SPPJY

Sappi

(OTC:SPPJY)

Rating:62Neutral
Price Target:
$2.00
▲(19.05% Upside)
Sappi's overall stock score reflects a challenging financial and operational environment. The most significant factors are the mixed financial performance and negative earnings call sentiment. While the valuation appears attractive, technical indicators and cash flow issues pose risks.

Sappi (SPPJY) vs. SPDR S&P 500 ETF (SPY)

Sappi Business Overview & Revenue Model

Company DescriptionSappi Limited is a global leader in the production of wood fiber-based products, operating primarily in the forest products sector. The company is headquartered in South Africa and has a diverse portfolio that includes the manufacturing of dissolving wood pulp, paper, and paper-based products. Sappi serves various end-use markets, including packaging, graphic papers, and specialty papers, focusing on sustainable practices and innovation to meet customer needs across the globe.
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
65
Positive
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.
Balance Sheet
70
Positive
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.
Cash Flow
55
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue5.50B5.46B5.81B7.30B5.26B4.61B
Gross Profit635.00M776.00M907.00M1.37B549.00M399.00M
EBITDA626.00M497.00M731.00M1.08B444.00M283.00M
Net Income96.00M33.00M259.00M536.00M13.00M-135.00M
Balance Sheet
Total Assets6.23B6.21B5.80B6.23B6.19B5.46B
Cash, Cash Equivalents and Short-Term Investments203.00M317.00M601.00M780.00M366.00M279.00M
Total Debt2.15B1.74B1.69B1.94B2.31B2.24B
Total Liabilities3.78B3.63B3.35B3.87B4.22B3.82B
Stockholders Equity2.45B2.58B2.44B2.36B1.97B1.63B
Cash Flow
Free Cash Flow-474.00M-349.00M223.00M514.00M33.00M-91.00M
Operating Cash Flow148.00M124.00M605.00M882.00M407.00M260.00M
Investing Cash Flow-588.00M-430.00M-395.00M-376.00M-378.00M-517.00M
Financing Cash Flow258.00M-80.00M-501.00M-43.00M33.00M138.00M

Sappi Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1.68
Price Trends
50DMA
1.62
Positive
100DMA
1.73
Negative
200DMA
2.07
Negative
Market Momentum
MACD
0.02
Negative
RSI
55.84
Neutral
STOCH
86.66
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPPJY, the sentiment is Positive. The current price of 1.68 is above the 20-day moving average (MA) of 1.62, above the 50-day MA of 1.62, and below the 200-day MA of 2.07, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 55.84 is Neutral, neither overbought nor oversold. The STOCH value of 86.66 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SPPJY.

Sappi Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
73
Outperform
$6.74B21.9517.53%1.14%-1.44%-31.12%
65
Neutral
$12.01B8.5718.34%3.46%11.48%1773.12%
65
Neutral
$1.80B8.4624.37%3.97%-4.03%-5.27%
62
Neutral
$1.02B10.713.92%6.07%2.43%
62
Neutral
$10.28B6.210.76%2.84%3.10%-36.03%
59
Neutral
$353.00M33.74-4.36%-26.71%-329.19%
43
Neutral
$213.67M-23.39%9.40%-2.16%44.89%
* Basic Materials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
SPPJY
Sappi
1.67
-0.74
-30.71%
CLW
Clearwater Paper
22.01
-8.21
-27.17%
LPX
Louisiana-Pacific
99.02
6.77
7.34%
MERC
Mercer International
3.23
-2.84
-46.79%
SUZ
Suzano Papel e Celulose SA
9.63
0.18
1.90%
SLVM
Sylvamo Corp
45.38
-27.04
-37.34%
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.Date of analysis: Sep 03, 2025