Canfor (CFP) AI Stock Analysis

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TSE:CFP Dividends

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Canfor

(TSX:CFP)

51Neutral

Canfor's stock score reflects significant financial challenges with declining revenues, profitability issues, and cash flow pressures. Technical indicators suggest a bearish outlook. However, positive strategic shifts and a strong balance sheet provide some support. The renewed share repurchase program adds a slight positive element.

Positive Factors

Negative Factors

Export Duties

Higher export duties are likely to pressure Canfor's EBITDA.

Financial Health

Canfor has experienced a significant net cash reduction from C$1.3bn to C$262mm, indicating financial strain.

Financial Performance

Canfor has generated a significant EBITDA loss in its North American lumber operations.

Canfor (CFP) vs. S&P 500 (SPY)

Market Cap

$1.59B

Dividend YieldN/A

Average Volume (3M)205.24K

Price to Earnings (P/E)―

Beta (1Y)1.48

Revenue Growth-3.20%

EPS Growth-107.88%

CountryCA

Employees6,634

SectorBasic Materials

Sector Strength61

IndustryPaper, Lumber & Forest Products

Share Statistics

EPS (TTM)-0.33

Shares Outstanding118,405,080

10 Day Avg. Volume213,393

30 Day Avg. Volume205,237

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.35

Price to Cash Flow (P/CF)5.20

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$17.50

Price Target Upside32.91% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

Canfor Business Overview & Revenue Model

Company DescriptionCanfor Corporation (CFP) is a leading integrated forest products company based in Canada. The company operates primarily in the lumber and pulp & paper sectors. Canfor's core products include high-quality wood products, such as lumber, plywood, and engineered wood, as well as pulp and paper products. With operations across North America and a significant presence in international markets, Canfor is dedicated to sustainable forestry practices and innovation in wood products manufacturing.

How the Company Makes MoneyCanfor makes money primarily through the production and sale of wood products and pulp & paper. The company's revenue model is centered on its lumber segment, which involves harvesting timber from its forest lands and processing it into various wood products for construction, renovation, and industrial applications. Key revenue streams include sales of lumber, plywood, and other engineered wood products to both domestic and international markets. Additionally, Canfor generates income from its pulp and paper segment by producing pulp used in the manufacturing of tissue, paper, and other products. The company's earnings are influenced by factors such as global demand for wood products, lumber prices, and trade relationships. Strategic partnerships and acquisitions also play a significant role in expanding its market reach and enhancing its revenue potential.

Canfor Financial Statement Overview

Summary

Canfor is facing significant financial challenges with declining revenues and profitability. The income statement indicates significant headwinds in maintaining profitability, while the balance sheet shows increasing leverage and reduced equity. Cash flow generation remains a concern, with positive operating cash flow but insufficient to cover capital expenditures.

Income Statement

Negative

Canfor has experienced declining revenue with a notable decrease from $7.43 billion in 2022 to $5.25 billion in 2024, indicating a negative revenue growth trend. The company faces profitability challenges, evidenced by negative EBIT and net income in recent years. Gross profit margin has also declined, reflecting inefficiencies or cost pressures. Overall, the income statement reveals significant headwinds in maintaining profitability.

Balance Sheet

Neutral

The balance sheet shows a decrease in stockholders' equity, reflecting financial strain. While the debt-to-equity ratio remains manageable, it has increased, indicating higher leverage risk. The equity ratio has declined, suggesting reduced financial stability. Despite these challenges, the company maintains a reasonable cash position, providing some liquidity cushion.

Cash Flow

Neutral

Operating cash flow has been positive but insufficient to cover capital expenditures, leading to negative free cash flow in recent years. The free cash flow to net income ratio is unfavorable, reflecting cash flow pressures. The company needs to enhance its cash generation capabilities to support operations and growth without over-reliance on external financing.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
5.25B	5.43B	7.43B	7.68B	5.45B
	Gross Profit
946.70M	904.00M	2.63B	3.51B	1.92B
	EBIT
-942.20M	-531.60M	1.07B	1.91B	727.30M
	EBITDA
-487.80M	-34.40M	1.53B	2.30B	1.15B
	Net Income Common Stockholders
-669.00M	-326.10M	787.30M	1.34B	544.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
259.30M	627.40M	1.27B	1.35B	419.20M
	Total Assets
5.57B	6.13B	6.74B	6.17B	5.11B
	Total Debt
703.60M	399.30M	392.40M	335.80M	773.70M
	Net Debt
444.30M	-228.10M	-876.30M	-1.02B	354.50M
	Total Liabilities
1.99B	1.85B	1.98B	2.16B	2.48B
	Stockholders Equity
3.31B	3.82B	4.22B	3.48B	2.21B
Cash Flow		Free Cash Flow
-352.90M	-432.30M	487.70M	1.49B	872.10M
	Operating Cash Flow
174.20M	154.70M	1.11B	1.91B	1.07B
	Investing Cash Flow
-672.20M	-603.70M	-1.05B	-468.40M	-246.90M
	Financing Cash Flow
124.10M	-185.60M	-179.40M	-504.10M	-463.00M

Canfor Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price13.17

Price Trends

50DMA

14.48

Negative

100DMA

14.94

Negative

200DMA

15.48

Negative

Market Momentum

MACD

-0.49

Negative

RSI

40.55

Neutral

STOCH

57.57

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CFP, the sentiment is Neutral. The current price of 13.17 is below the 20-day moving average (MA) of 13.48, below the 50-day MA of 14.48, and below the 200-day MA of 15.48, indicating a bearish trend. The MACD of -0.49 indicates Negative momentum. The RSI at 40.55 is Neutral, neither overbought nor oversold. The STOCH value of 57.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:CFP.

Canfor Peers Comparison

Overall Rating

UnderperformOutperform

Sector (49)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CFP	51 Neutral	$1.59B	―	-18.83%	―	-3.20%	-107.88%
Sector *	49 Neutral	$1.95B	-1.49	-20.76%	3.74%	1.00%	-28.87%
CFX	49 Neutral	C$49.58M	―	-63.11%	―	-8.78%	-68.46%
IFP	48 Neutral	$705.95M	―	-18.73%	―	-8.81%	-13.99%

* Basic Materials Sector Average

Performance Comparison

TSE:CFP

Canfor

13.17

-1.95

-12.90%

TSE:IFP

Interfor

13.28

-4.86

-26.79%

TSE:CFX

Canfor Pulp Products

0.76

-0.79

-50.97%

Canfor Earnings Call Summary

Earnings Call Date:Mar 06, 2025

(Q4-2024)

% Change Since: -9.79%|

Next Earnings Date:May 08, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted successful strategic transformations, increased lumber prices, and strong financial performance in the pulp business, contributing to a positive outlook. However, challenges remain with fibre supply, trade disputes, and market volatility. The overall sentiment of the call is balanced with both positive achievements and significant challenges.

Q4-2024 Updates

Positive Updates

Successful Execution of Strategic Priorities

Canfor successfully executed several strategic priorities, transforming the business structure by closing high-cost assets and investing in low-cost capacity, resulting in an improved operating cost base and enhanced geographic diversification.

Increased Lumber Prices and Improved Profitability

Lumber prices have steadily increased over the last several months, supporting improved profitability, particularly in Western Canada.

Strong Financial Performance in Pulp Business

Canfor Pulp generated solid financial results in Q4, supported by stable global pulp markets and strong performance in the paper business.

Improved Cost Structure and Geographic Diversification

The company has made changes to its operating platform and sales strategy to mitigate trade disputes impacts, with only 20% of sales exposed to duties or tariffs.

Strong Balance Sheet and Capital Allocation Strategy

Canfor enters 2025 with a strong balance sheet, allowing for continued evaluation of strategic growth opportunities and plans for opportunistic share repurchases.

Negative Updates

Challenges in Fibre Supply and Trade Disputes

There remains uncertainty with respect to fibre supply in 2025 due to elevated softwood lumber duties and potential additional tariffs.

Reduction in Pulp Shipments

Canfor Pulp's adjusted EBITDA decreased by $7 million from the prior quarter, largely due to a 22% reduction in shipments following the winddown of a production line.

Market Volatility and Uncertainty

The company anticipates continued volatility and market uncertainty, particularly with the threat and implementation of tariffs.

Tariffs and Duties Impact

While changes have been made to mitigate impacts, the company still faces challenges with only 20% of sales exposed to tariffs and duties.

Company Guidance

During the fourth quarter analyst call, Canfor and Canfor Pulp provided guidance on several key metrics for 2025. The company highlighted that 70% of its lumber business is now located outside Canada due to strategic decisions to close high-cost assets in British Columbia and the US South. Canfor anticipates a more modest capital expenditure (CapEx) plan of approximately $250 million for the lumber business and $50 million for Canfor Pulp in 2025. The company also expects to continue share repurchases under its normal course issuer bid. Adjusted EBITDA for the lumber business was $22 million in Q4, up by $64 million from the previous quarter, while Canfor Pulp reported an adjusted EBITDA of $12 million, down by $7 million from Q3. The company has prepared for elevated duties, with only 20% of sales exposed to tariffs, and expects to book a small recovery from the antidumping duty rate announced in the sixth administrative review. Despite market uncertainties, Canfor remains optimistic about mid- to long-term lumber demand and maintains a strong balance sheet for potential strategic growth opportunities.

Canfor Corporate Events

Shareholder MeetingsFinancial Disclosures

Canfor Corporation Schedules AGM and Q1 2025 Results Call

Neutral

Apr 12, 2025

Canfor Corporation announced its Annual General Meeting scheduled for May 8, 2025, to be conducted virtually, allowing shareholders to participate and ask questions. Additionally, Canfor will hold a joint conference call with Canfor Pulp Products Inc. on May 9, 2025, to discuss their Q1 2025 financial and operating results, providing insights into the company’s performance and future outlook.

Spark’s Take on TSE:CFP Stock

According to Spark, TipRanks’ AI Analyst, TSE:CFP is a Neutral.

Canfor’s overall stock score reflects significant financial challenges, including declining revenues and profitability pressures. While recent strategic moves and technical analysis provide some positive momentum, valuation concerns persist with a negative P/E ratio. The earnings call and corporate events highlight strategic improvements and potential for future growth, balancing the score towards a moderate outlook.

To see Spark’s full report on TSE:CFP stock, click here.

Shareholder MeetingsFinancial Disclosures

Canfor Corporation Schedules Annual Meeting and Q1 Results Call

Neutral

Apr 11, 2025

Canfor Corporation has announced the timing of its Annual General Meeting and Q1 2025 Results Conference Call. The Annual General Meeting will be held virtually on May 8, 2025, and the joint analyst conference call with Canfor Pulp Products Inc. will take place on May 9, 2025. The announcement is significant for stakeholders as it provides an opportunity for shareholders and analysts to engage with the company’s management regarding its financial and operational performance.

Spark’s Take on TSE:CFP Stock

According to Spark, TipRanks’ AI Analyst, TSE:CFP is a Neutral.

To see Spark’s full report on TSE:CFP stock, click here.

Shareholder MeetingsFinancial Disclosures

Canfor Corporation Schedules Annual General Meeting and Q1 2025 Results Call

Neutral

Apr 10, 2025

Canfor Corporation has announced its upcoming Annual General Meeting, which will be held virtually on May 8, 2025, followed by a joint analyst conference call with Canfor Pulp Products Inc. on May 9, 2025, to discuss Q1 2025 financial and operating results. These events are significant as they provide stakeholders with insights into the company’s performance and strategic direction, potentially impacting investor confidence and market positioning.

Spark’s Take on TSE:CFP Stock

According to Spark, TipRanks’ AI Analyst, TSE:CFP is a Neutral.

To see Spark’s full report on TSE:CFP stock, click here.

Stock BuybackBusiness Operations and Strategy

Canfor Renews Share Repurchase Program

Positive

Mar 19, 2025

Canfor Corporation has announced the renewal of its normal course issuer bid, allowing the company to repurchase up to 5% of its outstanding shares by March 2026. This strategic move is seen as an effective use of financial resources and aligns with the company’s interests, potentially impacting its market positioning and shareholder value positively.

Business Operations and StrategyFinancial Disclosures

Canfor Announces Q4 Results Conference Call for Analysts

Neutral

Feb 19, 2025

Canfor Corporation and Canfor Pulp Products Inc. have announced a joint analyst conference call scheduled for March 7, 2025, to discuss their fourth-quarter 2024 financial and operating results. This announcement is part of Canfor’s ongoing efforts to engage with the analyst and investment community, providing insights into their operations and financial performance, which is crucial for stakeholders monitoring the company’s market positioning and operational strategies.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.