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Veritiv Corporation Now a Strong Sell on Bleak Prospects


Zacks Investment Research downgraded Veritiv Corporation VRTV to a Zacks Rank #5 (Strong Sell) on Sep 19, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.

Why the Downgrade?

Veritiv Corporation’s financial performance has been weak with lower-than-expected results in second-quarter 2016. The company’s earnings of 49 cents per share were 7.55% below the Zacks Consensus Estimate of 53 cents. Revenues generated in the quarter declined 4.6% year over year, including roughly 0.7% negative impact from adverse foreign currency movements and 4% decline in core sales.

Veritiv Corporation expects economic uncertainties and revenue volatility to impact its full year 2016 results. Also, industry pressures will likely impact print and publishing businesses while commodity price fluctuation will remain a concern.

Lower-than-expected results and bleak prospects have made investors doubtful regarding Veritiv Corporation’s performance in the quarters ahead. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 3.3% to $2.81 per share for 2016 and by 6.7% to $3.88 for 2017. Our estimate for 2016 represents a year-over-year decline of 23.64%.

VERITIV CORP Price and Consensus

VERITIV CORP Price and Consensus | VERITIV CORP Quote

Stocks to Consider

Veritiv Corporation currently has a market capitalization of $791 million. Better-ranked stocks in the paper and related products industry include Domtar Corporation UFS, Neenah Paper, Inc. NP and SAPPI LTD ADS SPPJY. While Domtar Corporation sports a Zacks Rank #1 (Strong Buy), both Neenah Paper and SAPPI LTD carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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