Sappi Limited (SPPJY)
OTHER OTC:SPPJY
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Sappi
(OTC:SPPJY)
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Rating:43Neutral
Price Target:
$0.97
▼(-31.41% Downside)
Action:ReiteratedDate:02/06/26
The score is driven primarily by weak financial performance—margin compression, losses, and persistently negative free cash flow—alongside bearish technicals. The earnings call provides some support via cost actions and improved liquidity, but near-term guidance remains pressured and leverage is elevated; valuation is also constrained by loss-making results and no provided dividend yield.
Positive Factors
Liquidity and refinancing
Sizable undrawn facilities and a new five‑year term loan materially extend the liquidity runway. This durable liquidity cushion reduces near‑term refinancing and covenant risk, supports execution of cost and working‑capital actions, and gives time to complete strategic options like the UPM JV.
Negative Factors
Persistent negative free cash flow
Sustained negative free cash flow indicates the company is not converting accounting profits (or modest EBITDA) into surplus cash. This structural cash shortfall constrains debt reduction, limits reinvestment or shareholder returns, and increases dependence on external liquidity or asset sales over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Liquidity and refinancing
Sizable undrawn facilities and a new five‑year term loan materially extend the liquidity runway. This durable liquidity cushion reduces near‑term refinancing and covenant risk, supports execution of cost and working‑capital actions, and gives time to complete strategic options like the UPM JV.
Read all positive factors
Sappi (SPPJY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$607.36M
Dividend Yield6.78%
Average Volume (3M)30.00
Price to Earnings (P/E)―
Beta (1Y)1.26
Revenue Growth-1.40%
EPS Growth-786.45%
CountryUS
Employees12,329
SectorBasic Materials
Sector Strength58
IndustryPaper, Lumber & Forest Products
Share Statistics
EPS (TTM)-0.03
Shares Outstanding607,141,500
10 Day Avg. Volume0
30 Day Avg. Volume30
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.37
Price to Sales (P/S)0.16
P/FCF Ratio-2.63
Enterprise Value/Market Cap4.37
Enterprise Value/Revenue0.50
Enterprise Value/Gross Profit6.66
Enterprise Value/Ebitda13.78
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.09
Revenue Forecast (FY)$5.43B
Sappi Business Overview & Revenue Model
Company Description
Sappi 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, lab...
How the Company Makes Money
Sappi makes money primarily by manufacturing and selling pulp and paper-based products to customers globally. Its key revenue streams include: (1) Paper and paper solutions: revenue from the sale of various paper grades, including graphic papers a...
Sappi Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Negative
The call outlined significant near-term headwinds — primarily a large decline in DWP prices, translated currency impacts, weaker selling prices (~12% YoY), production disruptions and a slower-than-expected ramp at Somerset — which drove substantially lower EBITDA and higher leverage (net debt ~$1.95bn; net-debt/EBITDA ~5x). Management, however, emphasized material mitigating actions: securing refinancing and a larger RCF, preserving liquidity ($143m cash, ~ $608m undrawn RCF), a $120m cost-savings program (with ~$30m realized in Q1), CapEx discipline (reduced to $260m), ongoing working-capital releases, and a strategic JV with UPM that could reduce European graphic exposure and debt over time. While these initiatives provide meaningful downside protection and demonstrate financial and strategic responses, the combination of persistent market price weakness and near-term guidance that Q2 EBITDA will be lower indicates that negative trends currently outweigh the positives.Positive Updates
EBITDA and Cash Resilience
Reported adjusted EBITDA of $90 million for Q1 FY2026; net cash utilization for the quarter was only $3 million despite multiple headwinds, demonstrating operational cash resilience.
Negative Updates
Large decline in DWP pricing
Dissolving wood pulp (DWP) prices were about $160/tonne lower versus a year ago; spot DWP quoted at $805/tonne in the call. Management emphasized that lower DWP prices were a major adverse driver of earnings.
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Q1-2026 Updates
Positive
Negative
EBITDA and Cash Resilience
Reported adjusted EBITDA of $90 million for Q1 FY2026; net cash utilization for the quarter was only $3 million despite multiple headwinds, demonstrating operational cash resilience.
Read all positive updates
Company Guidance
Guidance highlights: management expects Q2 adjusted EBITDA to be lower than Q1’s ~$90m given current exchange rates and dissolving wood pulp (DWP) pricing (DWP spot ~$805/t, ~ $160/t down year‑on‑year); they’ve cut 2026 capital expenditure to $260m (from $290m), removed expansionary CapEx, and are targeting $120m of annual cost savings (about $30m realized in Q1, with the remainder spread roughly evenly over the next three quarters, and a ~60/40 fixed-to-variable split, with the bulk—≈$60m—coming from Europe). Net debt was $1,951m (net debt/adjusted EBITDA ~5x; covenant metric ~4.9x), net cash use in Q1 was ~$3m, cash on hand $143m with an undrawn RCF of $608m (RCF upsized to €550m), short‑term €183m replaced post‑quarter with a €200m 5‑year term loan (swapped to dollars), and expected headwinds include further negative plantation fair‑value adjustments, a ~$17m scheduled Somerset maintenance charge in Q1 already recorded and about $10m of EBITDA impact from U.S. utility incidents; management does not currently contemplate a capital raise and continues to pursue the UPM JV (signing/financing targeted H1 ’26, completion by end‑2026) to reduce European graphic exposure and leverage.Sappi Financial Statement Overview
Summary
Income Statement
34
Negative
Balance Sheet
52
Neutral
Cash Flow
28
Negative
| Breakdown | TTM | Sep 2025 | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.35B | 5.40B | 5.46B | 5.81B | 7.30B | 5.26B |
| Gross Profit | 399.03M | 534.42M | 776.00M | 907.00M | 1.37B | 549.00M |
| EBITDA | 192.70M | 320.05M | 497.00M | 731.00M | 1.08B | 444.00M |
| Net Income | -283.89M | -176.48M | 33.00M | 259.00M | 536.00M | 13.00M |
Balance Sheet | ||||||
| Total Assets | 5.99B | 6.07B | 6.21B | 5.80B | 6.23B | 6.19B |
| Cash, Cash Equivalents and Short-Term Investments | 143.00M | 218.99M | 317.00M | 601.00M | 780.00M | 366.00M |
| Total Debt | 2.20B | 2.14B | 1.74B | 1.69B | 1.94B | 2.31B |
| Total Liabilities | 3.65B | 3.76B | 3.63B | 3.35B | 3.87B | 4.22B |
| Stockholders Equity | 2.33B | 2.31B | 2.58B | 2.44B | 2.36B | 1.97B |
Cash Flow | ||||||
| Free Cash Flow | -392.24M | -322.05M | -349.00M | 223.00M | 514.00M | 33.00M |
| Operating Cash Flow | 60.44M | 172.49M | 124.00M | 605.00M | 882.00M | 407.00M |
| Investing Cash Flow | -456.54M | -455.65M | -430.00M | -395.00M | -376.00M | -378.00M |
| Financing Cash Flow | 231.13M | 177.47M | -80.00M | -501.00M | -43.00M | 33.00M |
Sappi Technical Analysis
Neutral
1.42
Price Trends
1.08
Negative
1.24
Negative
1.37
Negative
Market Momentum
-0.02
Negative
46.36
Neutral
35.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPPJY, the sentiment is Neutral. The current price of 1.42 is above the 20-day moving average (MA) of 1.01, above the 50-day MA of 1.08, and above the 200-day MA of 1.37, indicating a bearish trend. The MACD of -0.02 indicates Negative momentum. The RSI at 46.36 is Neutral, neither overbought nor oversold. The STOCH value of 35.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SPPJY.
Sappi Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $12.34B | 4.81 | 31.48% | 1.96% | 6.65% | 47.88% | |
64 Neutral | $4.94B | 38.72 | 8.46% | 1.37% | -3.26% | -46.80% | |
61 Neutral | $10.43B | 7.12 | -0.05% | 2.87% | 2.86% | -36.73% | |
56 Neutral | $1.69B | 14.64 | 13.86% | 3.51% | -8.92% | -32.30% | |
44 Neutral | $238.33M | 1.93 | -2.50% | ― | -21.76% | -1214.73% | |
44 Neutral | $94.45M | -0.27 | -151.86% | 10.77% | -5.85% | 9.13% | |
43 Neutral | $607.36M | -6.10 | 3.97% | 6.78% | -1.40% | -786.45% |
* Basic Materials Sector Average
SPPJY
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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.