Author Topic: VRS - Verso Corporation  (Read 650 times)

Stuart D

  • Jr. Member
  • **
  • Posts: 62
VRS - Verso Corporation
« on: September 28, 2019, 12:51:29 AM »
  • Strong balance sheet
  • P/FCF = 3.8 (based on current market cap and 2017 FCF)
  • P/FCF = 2.1 (based on current market cap and 2018 FCF)
  • CEO incentivised to sell the business at a premium price

  • Dying industry (Verso Corp. produces graphic paper used in magazines, trade journals & catalogs)
  • Increased competition from Europe and Asia
  • Capital allocation (CEO and Board want to grow FCF and EBITDA instead of buybacks)

banjo1055's VIC write up from June 2019 when the market cap was $600m:

Currently trading down at $433m due to poor 2019 q2 results and the CEO and Board not committing to buy back stock.

No doubt smarter minds than mine have checked out this industry before. I'd be interested to hear your thoughts on Verso's current valuation.
« Last Edit: September 28, 2019, 05:52:24 PM by Stuart D »

Stuart D

  • Jr. Member
  • **
  • Posts: 62
Re: VRS - Verso Corporation
« Reply #1 on: September 30, 2019, 12:25:34 AM »
CEO Leslie Lederer, in his previous role as Chief Restructuring Officer at Catalyst Paper sold 2 x paper mills for a total of $175m. These mills had a combined annual capacity of 550,000 tonnes. A sale price of ~$300/(tonne of capacity).

VRS currently have 7 x mills. 1 x mill is being shut down (Luke, Maryland).

The 6 x remaining mills have a combined annual capacity of 2,630,000 tonnes. Selling at ~$300/tonne of capacity = $789m, compared to the current market cap of $433m. This is a crude valuation metric, yet still there probably isn't enough margin of safety for me at the current price.