Mercer International Inc. (NASDAQ: MERC)

Sector: Basic Materials Industry: Paper & Paper Products CIK: 0001333274
Market Cap 139.86 Mn
P/B 2.06
P/E -0.28
P/S 0.07
ROIC (Qtr) -22.34
Div Yield % 7.18
Rev 1y % (Qtr) -7.96
Total Debt (Qtr) 1.61 Bn
Debt/Equity (Qtr) 23.64
Add ratio to table...

About

Investment thesis

Bull case

  • Tangible assets of 2.02B provide robust 2705.11x coverage of other current liabilities 745000, indicating strong asset backing.
  • Free cash flow of (73.61M) provides excellent 7.33x coverage of dividends (10.04M), indicating sustainable shareholder returns.
  • Robust tangible asset base of 2.02B provides 3.46x coverage of working capital 582.18M, indicating strong operational backing.
  • Strong cash position of 186.81M provides 250.74x coverage of other current liabilities 745000, indicating excellent liquidity.
  • Cash reserves of 186.81M provide solid 2.31x coverage of other non-current liabilities 80.73M, indicating strong liquidity.

Bear case

  • Operating cash flow of 8.59M barely covers its investment activities of (81.33M), with a coverage ratio of -0.11, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 8.59M provides thin coverage of dividend payments of (10.04M) with a -0.86 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (73.61M) provides weak coverage of capital expenditures of 82.20M, with a -0.90 ratio suggesting additional external financing needs for growth initiatives.
  • The company's operating cash flow of 8.59M shows concerning coverage of stock compensation expenses of 2.29M, with a 3.76 ratio indicating potential earnings quality issues.
  • Operating earnings of (396.38M) show weak coverage of depreciation charges of 160.05M, with a -2.48 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Paper & Paper Products
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SUZ Suzano S.A. 13.57 Bn 5.54 1.48 18.56 Bn
2 SLVM Sylvamo Corp 2.07 Bn 17.58 0.57 0.81 Bn
3 MAGN Magnera Corp 0.49 Bn -3.69 0.15 1.98 Bn
4 CLW Clearwater Paper Corp 0.28 Bn 1.98 0.18 0.34 Bn
5 MERC Mercer International Inc. 0.14 Bn -0.28 0.07 1.61 Bn
6 ITP It Tech Packaging, Inc. 0.00 Bn -0.21 0.03 0.01 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.78 0.52
EV to Cash from Ops. EV/CFO 185.82 31.57
EV to Debt EV to Debt 0.99 1.42
EV to EBIT EV/EBIT -4.03 14.32
EV to EBITDA EV/EBITDA -6.71 5.50
EV to Free Cash Flow [EV/FCF] EV/FCF -21.68 2.55
EV to Market Cap EV to Market Cap 11.41 3.68
EV to Revenue EV/Rev 0.85 0.59
Price to Book Value [P/B] P/B 2.06 1.28
Price to Earnings [P/E] P/E -0.28 3.49
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -49.60 -7.86
Dividend Payout Ratio % Div Payout % (Qtr) -2.00 6.42
Dividend per Basic Share Div per Share (Qtr) 0.15 0.33
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -13.65 9.15
Interest Coverage Int. cover (Qtr) -3.45 0.06
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -27.55 14.26
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 1.02 21.24
Dividend Growth (1y) % Div 1y % (Qtr) -50.00 -5.00
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -1,872.39 -165.64
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -227.93 132.21
EBIT Growth (1y) % EBIT 1y % (Qtr) -1,882.67 -132.43
EBT Growth (1y) % EBT 1y % (Qtr) -488.17 853.95
EPS Growth (1y) % EPS 1y % (Qtr) -485.83 120.07
FCF Growth (1y) % FCF 1y % (Qtr) -385.76 -94.28
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -135.71 -21.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.92 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.04
Cash Ratio Cash Ratio (Qtr) 0.66 0.50
Current Ratio Curr Ratio (Qtr) 3.05 2.37
Debt to Equity Ratio Debt/Equity (Qtr) 23.64 4.86
Interest Cover Ratio Int Coverage (Qtr) -3.45 0.06
Times Interest Earned Times Interest Earned (Qtr) -3.45 0.06
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) -12.70 17.55
EBIT Margin % EBIT Margin % (Qtr) -21.22 47.08
EBT Margin % EBT Margin % (Qtr) -27.37 1.88
Gross Margin % Gross Margin % (Qtr) -3.60 12.55
Net Profit Margin % Net Margin % (Qtr) -26.70 -0.58