Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.
Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.
Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Derma Sciences (Nasdaq: DSCI ) , whose recent revenue and earnings are plotted below.
Top Gas Companies To Buy Right Now: Neenah Paper Inc. (NP)
Neenah Paper, Inc. produces technical products and fine papers worldwide. The company�s Technical Products segment provides filtration media for applications in automotive transportation; saturated and unsaturated crepe and flat paper tapes to manufacturers; lightweight abrasive paper for waterproof and dry sanding applications; wall covering substrates to converters serving commercial and consumer-do-it-yourself markets; label and tag products to pressure sensitive coaters; latex saturated and coated papers; premask, medical packaging, image transfer, and decorative components papers; and other products, such as clean room papers, durable printing papers, release papers, and furniture backers. Its Fine Paper segment manufactures and sells writing papers used for business and personal stationery, corporate identity packages, and related end-use applications; text and cover papers and envelopes used in corporate brochures, pocket folders, corporate annual reports, advertis ing inserts, direct mail, business cards, hang tags, scrapbooks, and various other uses; custom colors, paper finishes, and duplex/laminated papers; and bright papers used in direct mail, advertising inserts, scrapbooks, and marketing collateral applications. This segment also offers other specialty papers for various applications in wine labels and luxury packaging, as well as specialty paper products for enhanced image, such as translucent and art papers, papers for optical scanning, and other specialized applications. Neenah Paper, Inc. markets its products primarily under the JET-PRO, SofStretch, KIMDURA, MUNISING LP, PREVAIL, NEENAH, GESSNER, varitess, CLASSIC, CLASSIC CREST, ESSE ENVIRONMENT, ROYAL SUNDANCE, ASTROBRIGHTS, EXACT BRIGHTS, CAPITOL BOND, CRANE'S BOND, and CRANE'S LETTRA brands. The company sells its products through authorized paper distributors, converters, and direct sales. Neenah Paper, Inc. was founded in 2004 and is headquartered in Alpharetta, Georgi a.
Advisors' Opinion:- [By Marc Bastow]
Fine paper manufacturer and distributor Neenah Paper (NP) raised its quarterly dividend 20% to 24 cents per share, payable on Mar. 4 to shareholders of record as of Feb. 14.
NP Dividend Yield: 2.41% - [By Tannor Pilatzke]
Neenah Paper (NP) Spin-off in 2004
Neenah Paper was named after the Kimberly Clark headquarters in Wisconsin and has two primary operations: technical products business and fine paper business. The Company�� technical products business is a producer of transportation and other filter media and coated substrates for industrial products backings and a variety of other end markets. The Company�� fine paper business is the supplier of writing, text and cover papers, bright papers and specialty papers in North America. The Company�� writing, text, cover and specialty papers are used in commercial printing and imaging applications for corporate identity packages, invitations, personal stationery and corporate annual reports, as well as, labels and packaging.
- [By Rich Duprey]
Specialty-paper maker�Neenah Paper� (NYSE: NP ) �announced yesterday�its third-quarter dividend of $0.20 per share, a�33% increase over the $0.15 per-share payout made last quarter, and comes quickly on the heels of a 25% dividend hike it made with the first-quarter payout.
Hot Income Stocks To Buy For 2014: Saia Inc.(SAIA)
Saia, Inc., an asset-based trucking company, provides transportation and supply chain solutions primarily to the retail, chemical, and manufacturing industries in the United States. The company, through it subsidiary, Saia Motor Freight Line, LLC, offers regional and interregional less than truckload (LTL) services, selected national LTL, and time-definite services. It was formerly known as SCS Transportation, Inc. Saia, Inc. was founded in 2000 and is headquartered in Johns Creek, Georgia.
Advisors' Opinion:- [By Ben Levisohn]
Wunderlich’s Nicholas Bender thinks FedEx’s results bode well for Old Dominion (ODFL), Con-way (CNW) and Saia (SAIA):
We expect all less-than-truckload carriers to benefit in 2Q14 from the same trends that carried FedEx Freight to a banner 4Q14. This includes Hold-rated Old Dominion, which will continue to grow at well above market rates, and Buy-rated Con-way, which we believe can leverage a strong 2Q14 to prime the pump on margin enhancement efforts. Our favorite name in the space remains Saia (SAIA-$42.92, Buy), which will once again see accelerating tonnage growth in 2Q14. Though tonnage growth will moderate in� 2H14 due to steeper comps, there remains considerable potential for the company to boost yield and continue winning incremental business with new accounts.
- [By John Udovich]
Despite what can best be described as a�soft economy, small cap trucking stocks YRC Worldwide, Inc (NASDAQ: YRCW), Arkansas Best Corporation (NASDAQ: ABFS), Frozen Food Express Industries, Inc (NASDAQ: FFEX), Saia Inc (NASDAQ: SAIA) and USA Truck, Inc (NASDAQ: USAK) have been trucking some pretty impressive returns since the start of the year. In fact, these small cap trucking stocks are up anywhere from 72% to 150% or so since the start of the year despite the slow economy. Certainly trucking stocks provide a good indicator of how the economy is doing, but might investors be�jumping the gun by pushing up these trucking stocks?
Hot Income Stocks To Buy For 2014: Roche Holding AG (ROG.VX)
Roche Holding AG is a Swiss pharmaceuticals and diagnostics holding company. It belongs to the Roche Group that operates through subsidiaries and associated companies around the world. It discovers, develops and provides diagnostic and therapeutic products and services from early detection and prevention of diseases to diagnosis, treatment and treatment monitoring. The Company has two divisions: Pharmaceuticals and Diagnostics. Pharmaceuticals are divided into two sub-divisions: Roche Pharmaceuticals and Chugai. It operates in the United States, Western Europe, Japan, CEMAI (Central and Eastern Europe, Middle East, Africa, Central Asia, Indian Subcontinent), Latin America, Asia-Pacific and Other regions. Diagnostics include five business areas: Applied Science, Diabetes Care, Molecular Diagnostics, Tissue Diagnosis and Professional Diagnostics. It operates in five geographical regions: Europe, Middle East and Africa (EMEA); North America; Asia-Pacific; Latin America, and Japan. Advisors' Opinion:- [By Lauren Pollock]
Roche Holding AG(ROG.VX) has entered a pact with Prothena Corp.(PRTA) PLC to develop and commercialize a treatment the clinical-stage biotechnology firm is developing for Parkinson’s disease. In after-hours trading, Prothena’s stock rose 8.6% to $29.75 premarket.
Hot Income Stocks To Buy For 2014: Ten Peaks Coffee Company Inc (TPK)
Ten Peaks Coffee Company Inc. (Ten Peaks) is a Canada-based company. It operates its business through its subsidiary, Swiss Water Decaffeinated Coffee Company Inc. (SWDCC), which is a green coffee decaffeinator located in Burnaby, British Columbia. It also owns and operates Seaforth Supply Chain Solutions Inc. (Seaforth), a green coffee handling and warehousing business located in Metro Vancouver. SWDCC is engaged in the coffee decaffeination business utilizing the branded Swiss Water Process of 100% chemical free green coffee decaffeination. SWDCC has two subsidiaries, which include Swiss Water Decaffeinated Coffee Co. USA, Inc, and Swiss Water Process Marketing Services Inc. On November 18, 2011, a subsidiary of Ten Peaks, Seaforth Supply Chain Solutions Inc., was incorporated. On January 1, 2011, in response to changes to the legislation governing the taxation of income trusts which made the income trust form of structure less advantageous, the Fund converted to a corporation. Advisors' Opinion:- [By Inyoung Hwang]
Travis Perkins Plc (TPK) lost 1.6 percent to 1,749 pence. The builders��merchant said its consumer division failed to grow on a comparable basis in the third quarter, slipping from an 8.6 percent increase in the two months ended June.
Hot Income Stocks To Buy For 2014: Eaton Vance Corporation (EV)
Eaton Vance Corp., through its subsidiaries, engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. Further, the company operates as an adviser and distributor of investment companies and separate accounts. As of October 31, 2004, the company provided investment advisory or administration services to approximately 150 funds; approximately 1,300 separately managed individual and institutional accounts; and participated in approximately 40 retail-managed account broker/dealer programs. It markets and distributes shares of funds through a retail network of national and regional broker/dealers, banks, insurance companies, and financial planning firms. Eaton Vance Corp. was founded in 1944 and is headquartered in Boston, Massachusetts.
Advisors' Opinion:- [By Dan Caplinger]
An even more interesting proposal came from Eaton Vance (NYSE: EV ) earlier this year, which asked the SEC to allow it to create what it calls an exchange-traded managed fund. Ideally, Eaton Vance would like to see the SEC allow it not to make daily disclosure of its holdings, with the company seeking to use what's known as NAV-based trading to help facilitate trade. With NAV-based trading, investors would agree to pay not a fixed dollar value for shares but rather a variable price above or below whatever turns out to be the day's final net asset value for the ETF's assets. Eaton Vance hopes that such an idea would satisfy any concerns about lack of daily disclosure of holdings while still allowing efficient intraday trading. Given that the SEC allows mutual funds to disclose holdings as infrequently as once per quarter -- with a lag allowed between the end of each quarter and the filing date -- it's not unreasonable to expect active ETFs eventually to get similar treatment.
- [By Dan Caplinger]
Some of T. Rowe Price's competitors have made moves toward offering actively managed ETFs. For instance, earlier this year, Eaton Vance (NYSE: EV ) filed with the SEC to create a new type of ETF, limiting the amount of disclosure the company would have to make about its holdings. So far, actively managed ETF have largely been limited to the bond arena, where requirements for daily disclosure of holdings don't represent as much of a loss of proprietary information. For now, T. Rowe Price has said it has no immediate plans to offer active ETFs.
Hot Income Stocks To Buy For 2014: Rayonier Inc. REIT(RYN)
Rayonier, Inc. engages in the sale and development of real estate and timberland management, as well as in the production and sale of cellulose fibers in the United States, New Zealand, and Australia. The company operates in four segments: Timber, Real Estate, Performance Fibers, and Wood Products. Timber segment owns, leases, or manages timberlands and sells standing timber at auction to third parties, as well as sells delivered logs. Real Estate segment sells medium and large tracts of land with infrastructure. This segment holds development and rural properties primarily in the southeast United States. Performance Fibers segment manufactures cellulose specialties that are used principally in acetate textile fibers, cigarette filters, rigid packaging, LCD screens, photographic film, impact-resistant plastics, high-tenacity rayon yarn, pharmaceuticals, cosmetics, detergents, food casings, and food products; and absorbent materials that are used in disposable baby diapers, feminine hygiene products, incontinence pads, convalescent bed pads, industrial towels and wipes, and nonwoven fabrics. Wood Products segment primarily manufactures and sells dimension lumber used for residential and industrial construction applications. In addition, Rayonier involves in trading and exporting logs, lumber, and wood panel products. As of December 31, 2005, it owned, leased, or managed approximately 2.5 million acres of timberland and real estate. The company has a joint venture with RREEF Infrastructure to own and manage timber lands in New Zealand. Rayonier has elected to be treated as a real estate investment trust (REIT) for federal income tax purposes and would not be subject to federal income tax on its REIT income that it distributes to its shareholders. The company, formerly known as Rainier Pulp & Paper Company, was founded in 1926. Rayonier is headquartered in Jacksonville, Florida.
Advisors' Opinion:- [By Matt DiLallo]
Not only are�homebuilders�benefiting�but this improvement in housing has had a nice effect on the bottom line of forestry companies.�Weyerhaeuser (NYSE: WY ) �saw its first-quarter earnings more than triple as its wood products business reported its strongest quarterly earnings since 2005. Industry peer Rayonier (NYSE: RYN ) also experienced a successful first quarter as its income from continuing operations nearly doubled year over year from $52 million last year to $103 million.
- [By Jake L'Ecuyer]
Rayonier (NYSE: RYN) was also up, gaining 6.78 percent to $43.97 after the company reported Q4 results and announced its plans to separate into two public companies.
- [By Shauna O'Brien]
Shares of Rayonier Inc. (RYN) were up over 11% on Monday morning after the company reported earnings above analysts’ estimates.�
RYN’s Earnings in Brief
RYN reported earnings of $80 million, or 62 cents per share, up from $76 million, or 59 cents per share a year ago. Revenue for the quarter was�$520.2 million, �above analysts’ estimate of $442.36 million. FY2013 earnings were�$372 million, or $2.86 per share, compared to $279 million, or $2.17 per share last year. RYN also announced that it now plans to separate its��from its Forest Resources and Real Estate business. The spin off will result in two separate publicly traded companiesCEO Commentary
Paul Boynton, Chairman, President and CEO commented:�”As part of our strategic planning process, we began in-depth analysis and preparation for the business separation almost two years ago. With an improving U.S. housing market, strong timber export markets, and the successful expansion of our cellulose specialties capacity, we concluded that now is the optimal time to pursue the separation of these two non-integrated businesses.”
�RYN’s Dividend
RYN paid its last quarterly dividend of 49 cents on December 31. The company is expected to declare its next dividend sometime in February.
Stock Performance�
Rayonier shares were up $4.57, or 11.10% during pre-market trading Monday. The stock is down 2% YTD.
- [By Saibus Research]
WY and the majority of the timber, forest and paper products companies have a track record of unimpressive returns on capital, cyclical revenue and profit trends, heavy use of capital expenditures, and significant environmental regulation. We also think that WY's conversion to a REIT was a mistake. Morningstar Investment Research's Timber, Forest and Paper Products analyst Dan Rohr said it best when he rated WY and its Timber REIT peers Rayonier (RYN), Potlatch (PCH) and Plum Creek (PCL) as not possessing any economic moat. That probably explains why we only have an ancillary exposure to this industry for our proprietary portfolio based on our holdings in Brookfield Infrastructure (BIP) and Cintas (CTAS). Brookfield's Timber segment only accounts for 5% of its Fund Flows from operations and Cintas's document management business is suffering from reduced prices on recycled paper. At least Cintas Document Management only accounts for 8% of Cintas's revenue.
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