SYLVAMO CORPORATION (SLVM): what the price requires
At today's price, SYLVAMO CORPORATION (SLVM) is priced for 3.3% operating margins. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-11 · Source: https://boothcheck.com/report/SLVM
Headline
| Field | Value |
|---|---|
| Ticker | SLVM |
| Company | SYLVAMO CORPORATION |
| Sector / Industry | Basic Materials |
| Current price | $39.15/sh |
| Composition | Europe - Uncoated Papers 20% / Europe - Market Pulp 2% / Latin America - Uncoated Papers 24% / Latin America - Market Pulp 1% / North America - Uncoated Papers 50% / North America - Market Pulp 2% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.3% |
| Operating margin (mid-cycle) | 11.9% |
| Margin compression implied | -8.6pp |
| Trailing margin (depressed year) | 5.8% |
| Multiple paid | 8x mid-cycle operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 6.4% sits below it).
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple; earnings-power/growth-DCF say expensive.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.32x | 4 | expensive |
| Earnings | 5.71x | 4 | expensive |
| Relative | 0.51x | 3 | justifies |
| Growth | 2.24x | 3 | expensive |
Families that justify the price: Relative Families that call it expensive: Earnings, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.4%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $3.27 | 11.97x | yes | FCF base $0.0B, growth -10% (input: historical growth), terminal g 0.5%, WACC 9.4%, 5yr projection |
| DCF Exit Multiple | Growth | $28.30 | 1.38x | yes | Exit EV/EBITDA: 4.0x / 4.0x / 6.0x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $55.74 | 0.70x | yes | P/E 14x (sector median), scenarios: 11.8x / 14.0x / 16.2x (bear / base = sector held flat / bull), EV/EBITDA 8x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $0.65 | 60.23x | yes | Stage 1: -72% for 5yr, Stage 2: 3.5% perpetual (excluded from median) |
| Simple Excess Return | Asset | $27.85 | 1.41x | yes | BV/sh $24.72, ROE (TTM) 10.4%, ke 9.3% |
| Two-Stage Excess Return | Asset | $29.50 | 1.33x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $17.48 | 2.24x | yes | Rev $3.3B, growth -11% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.5x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $33.45 | 1.17x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.15B × (1−21%) / WACC 9.4% → EPV (no growth) |
| Residual Income | Asset | $29.80 | 1.31x | yes | BV $24.72 + 5yr PV of (ROE (TTM) 10.4% − Kₑ 9.3%) × BV; BV grows 6.8%/yr |
| Graham Number | Asset | $37.37 | 1.05x | yes | √(22.5 × EPS $2.51 × BVPS $24.72) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $76.34 | 0.51x | yes | EBITDA $0.37B × sector EV/EBITDA 8.0x |
| FCF Yield | Earnings | $3.92 | 9.99x | yes | FCF $10.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $2.10 | 18.64x | yes | EPS $2.51 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $124.43 | 0.31x | yes | Revenue $3.29B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $27.14 | 1.44x | yes | EPS $2.51 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $791.0m |
| Net debt / NOPAT (after-tax) | 2.57x |
| Net debt / operating income (pre-tax) | 2.03x |
| Interest coverage | 7.9x |
| Share count CAGR (buyback) | -2.7% |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 11.9%); the trailing year was depressed.
| Operating income basis | Trailing value |
|---|---|
| Inversion record (pg-bars) | $381.1m |
| EDGAR quarterly TTM | $192.0m |
| Divergence | 98.5% |
The inversion header prices the record basis trailing operating income; this strip reads the EDGAR quarterly TTM, and the two diverge by more than 10 percent here. Treat them as different measurement bases, both labeled, neither silently substituted.
Bullet Takeaways
- Sylvamo is a global uncoated-paper pure play whose low-cost Brazilian fiber base (eucalyptus "harvested in less than seven years", FY2025 10-K, accession 0001856485-26-000008) anchors a franchise currently printing trough numbers: a $3 million Q1 2026 net loss on $755 million of sales with a 4% EBITDA margin.
- The biggest risk is that the trough is partly permanent: demand erodes with "adoption of electronic mediums" (accession 0001856485-26-000008), and the price's support rests on mid-cycle margins nearly double the trailing year's delivery.
- Watch second-quarter price-increase realization, the Q3 sheeter installation and Q4 Eastover outage that add roughly 60,000 tonnes of capacity, and whether free cash flow turns positive enough to keep covering the held $0.45 quarterly dividend.
Bull Case
The trajectory is the argument here, and it points at an inflection rather than a level. Sylvamo's last four quarters have been the worst stretch of its life as a public company: first-quarter 2026 sales of $755 million came with a $3 million net loss, adjusted EBITDA of just $29 million (a 4% margin), and negative $59 million of free cash flow. But the direction of travel is already turning. The company began implementing uncoated freesheet price increases across all regions during the quarter and is realizing them first in North America and Latin America, with more expected into the second quarter. Management has framed 2026 explicitly as a transition year with earnings and cash flow heavily weighted to the second half, and it put a number on the destination: over $300 million of annual free cash flow and 15%-plus returns on invested capital within three to five years.
The transition has concrete machinery behind it, not just hope. At Eastover, a paper machine optimization project scheduled to complete during a fourth-quarter maintenance outage adds roughly 60,000 metric tonnes of annual capacity, and a new cutsize sheeter installs in the third quarter and ramps in the fourth. The Georgetown transition moved roughly 100,000 tons of the most profitable grades to Ticonderoga and Eastover while exiting about 150,000 tons of low-margin volume. This is the standard playbook of a cyclical consolidating into its best assets, and Sylvamo's best assets are genuinely good: the 10-K describes Latin American fiber "harvested in less than seven years" (FY2025 10-K, accession 0001856485-26-000008), the fast-growth eucalyptus cost position that makes its Brazilian mills structurally low-cost, and brands that "allow us to maintain our long-term relationships with top-tier customers throughout economic cycles" (accession 0001856485-26-000008).
Meanwhile the price already assumes the recovery fails. At about 8 times mid-cycle operating income, the stock trades below what even a sustained 5% annual decline in operating profit would warrant, and the company kept paying its $0.45 quarterly dividend straight through the loss-making quarter, with the next payment set for July 28, 2026. A board that holds the dividend through the trough while spending on capacity is signaling it believes its own second-half story. If the price increases stick and the fourth-quarter projects land, the trailing numbers that make every cash-flow method scream expensive become exactly the wrong base year, and the multiple-based reads (which sit far above the price) get their vindication.
Bear Case
The price is a stack of assumptions about the future, and the load-bearing one is fragile: that today's collapsed earnings are cyclical when a meaningful part of the collapse is secular. Sylvamo sells printing and writing paper, and its own 10-K names the terminal risk in a list of demand factors: "commercial printing and advertising activity, adoption of electronic mediums" (FY2025 10-K, accession 0001856485-26-000008). Every valuation frame that supports today's $39.15 leans on mid-cycle normalization, an 11.9% through-cycle margin applied to current revenue. If structural demand decline means the old mid-cycle is not coming back, the normalized reads are anchored to a history the industry has exited. The trailing evidence is not subtle: a 4% EBITDA margin, negative free cash flow, and revenue that has been shrinking at a double-digit trailing pace.
The second assumption is that pricing power arrives on schedule. The filing is candid about how little control the company has: "prices for our products are driven by many factors outside of our control", and competitors facing closure costs "may choose to continue operating at a loss, which could prolong weak pricing environments due to oversupply" (accession 0001856485-26-000008). The announced price increases are being implemented into precisely that kind of market, and Europe (where realization is lagging North America and Latin America per the company's own account) shows what happens when oversupply meets weak demand. Currency adds another uncontrolled variable; the filing notes translation effects "in 2025 had a negative impact on our operating results" (accession 0001856485-26-000008).
The third assumption is that the balance sheet and the payout coexist peacefully through the transition. Net debt is $791 million, about 2 times mid-cycle operating income before tax but far more demanding against the actual trailing cash generation: free cash flow over the last year was roughly $10 million, and the first quarter alone burned $59 million while the dividend costs about $18 million a quarter. Liquid assets of $130 million cover the gap for now, and the second-half weighting may rescue the math, but a cyclical paying an uncovered dividend during a capex-heavy transition year, with an extended fourth-quarter outage still ahead and roughly $65 million of guided footprint-transition EBITDA drag, has thin margin for a delayed recovery. If the second half disappoints, the choice becomes dividend, deleveraging, or investment, and something gives.
Valuation
Because trailing earnings sit at a cyclical trough, the price reads against the company's own through-the-cycle economics: about 8 times mid-cycle operating income (an 11.9% normalized margin on current revenue), a multiple low enough that the price sits below what even a 5% annual operating-profit decline would warrant. Two measurement bases need naming once: the framework's normalized basis carries operating income near $381 to $389 million, while the EDGAR trailing tally reads $192 million, roughly half, which is the size of the trough the normalization is bridging. The priced-in read is that the market pays for less than a declining version of mid-cycle Sylvamo, broadly consistent with plausible outcomes, with the caveat that the comparison set for this profile is thin.
The families disagree along exactly the cyclical fault line. Sector multiples find the stock cheap: the EV/EBITDA read lands near double the price and the sales-based comparison further above. The asset and normalized-earnings reads land close to the price, with book-value-plus-profitability methods at $28 to $30 against $24.72 of book value per share, normalized earnings power at about $33, and the conservative book-and-earnings floor at $37, essentially today's print. What does not reach the price is anything anchored to trailing cash: the last year produced about $10 million of free cash flow, so capitalizing it supports almost nothing, and projections built off the recent negative growth trend land far below. The split is the whole story: multiples price the franchise, trailing cash prices the trough, and $39.15 (July 2026) sits between them, closer to the asset floor.
Solvency frames how long the company can argue with the cycle. Net debt of $791 million runs about 2 times mid-cycle pre-tax operating income with interest covered about 7.9 times, and the share count has come down about 2.7% a year over four years. The first quarter burned $59 million of free cash against $130 million of liquid assets, which is why the second-half weighting is not a detail but the load-bearing claim of the year: the Eastover projects complete in the fourth quarter, price-increase realization builds through the second, and the $0.45 quarterly dividend (next payable July 28, 2026) continues meanwhile. The decisive number for this price is whether normalized margins are a memory or a destination.
Catalysts
Management has staked 2026 on its second half, which makes the calendar unusually specific. The announced uncoated freesheet price increases began landing in the first quarter, with North America and Latin America realizing first and continued realization guided into the second quarter. The Eastover investment program then delivers in sequence: a new cutsize sheeter installs in the third quarter and ramps in the fourth, and the paper machine optimization project completes during a planned fourth-quarter maintenance outage, adding roughly 60,000 metric tonnes of annual capacity. Between now and then the company absorbs the end of the Riverdale supply agreement (terminated at the end of April) and the extended outage itself, both of which constrain volumes before they pay back.
The first quarter set the trough marker: $755 million of sales, a $3 million net loss, $29 million of adjusted EBITDA, and negative $59 million of free cash flow, with the full-year drag from the North American footprint transition now estimated at $65 million of EBITDA. Each subsequent quarterly print is a checkpoint against the stated destination of $300 million-plus of annual free cash flow and 15%-plus returns on invested capital within three to five years. The second-quarter report, on the usual early-August cadence, is the first test of whether price realization is outrunning the transition costs.
The dividend is the standing commitment to watch: $0.45 per share quarterly, affirmed through the loss-making quarter, next payable July 28, 2026. Holding it through a burn quarter was a confidence signal; holding it through a disappointing second half would become a balance-sheet question, and either way it is the cleanest single indicator of how management reads its own recovery.
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- IP (INTERNATIONAL PAPER COMPANY)
- FY2025 10-K: …its 2 Table of Contents position in the region, focusing on customers and leading on innovation with an advantaged cost position. In EMEA, we will prepare the business to stand alone as an independent, publicly traded entity following the separation with the goal of becoming the leading provider of innovative,…
- FY2025 10-K: …periods. PS NA and PS EMEA are primarily focused on producing fiber-based packaging. We produce linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft of which a majority of our production is converted into corrugated packaging and other packaging. The revenue for our PS NA and PS…
- PKG (PACKAGING CORP OF AMERICA)
- FY2025 10-K: …within a 150-mile radius of their plants and compete with other corrugated producers in their local region. Competition in our corrugated products operations tends to be regional, although we also face competition from competitors with significant national account presence. 6 On a national level, our primary…
- FY2025 10-K: …manufacturing operations to customers and load size. Our corrugated manufacturing operations typically serve customers within a 150-mile radius. Customers We sell containerboard and corrugated products to approximately 12,000 customers in approximately 27,000 locations. About 70% of our corrugated products sales are…
- GPK (Graphic Packaging Holding Co)
- FY2025 10-K: …customer functions. The Company is organized to bring the full resources of its global and local innovation, design and manufacturing capabilities to all of its customers with the goal of delivering packaging solutions that are more circular, more functional and more convenient. The Company competes with a wide range…
- FY2025 10-K: …reportable segments to appropriately represent the economics of these segments. The Corporate and Other caption, which does not meet the criteria of a reportable segment, includes the unallocated corporate costs and the Paperboard Manufacturing operating segment. The effect of intercompany transfers to the paperboard…
- SW (Smurfit Westrock plc)
- FY2025 10-K: …or cost- effective manner. Higher transportation costs could make our products less competitive compared to similar or alternative products offered by competitors. 26 The failure to obtain raw materials, energy or transportation services at reasonable market prices (or the failure to pass on price increases to…
- FY2025 10-K: …to the demand requirements of both internal and external converters located within an economically reasonable shipping distance from each mill, thereby minimizing logistics costs. Our strategy for the corrugated container and other converting plants focuses on both customized products tailored to fit customers' needs…
- KMB (KIMBERLY-CLARK CORPORATION)
- FY2025 10-K: Baby and Child Care and Family Care categories. Increased purchases of private label products could reduce net sales of our higher-margin products which would negatively impact our profitability. While the global marketplace in which we operate has always been highly competitive, we continue to experience increased…
- FY2025 10-K: …included approximately 130 basis points and 85 basis points, respectively, for charges related to the 2024 Transformation Initiative, primarily for incremental depreciation expense, workforce reductions and asset write-offs. Excluding these charges, adjusted gross margin was 37.3%, a decrease of 100 basis points…
- AVY (AVERY DENNISON CORPORATION)
- FY2025 10-K: …the impact of competitive products and pricing; the execution and integration of acquisitions; selling prices; customer and supplier concentrations or consolidations; the financial condition of distributors; outsourced manufacturers; product and service quality claims; restructuring and other cost reduction actions;…
- FY2025 10-K: …global economic conditions, tariffs, geopolitical uncertainty, and changes in environmental standards, regulations and preferences; (ii) competitors' actions, including pricing, expansion in key markets, and product offerings; (iii) the cost and availability of raw materials; (iv) the degree to which higher costs can…
- REYN (REYNOLDS CONSUMER PRODUCTS INC.)
- FY2025 10-K: …for a significant portion of our revenue. In 2025, sales to our top ten customers accounted for 74% of our total revenue. Three customers each accounted for sales greater than 10% of our total net revenue in 2025. Customers A, B and C accounted for 31%, 17% and 11%, respectively, of our total revenue. Customer A and…
- FY2025 10-K: …more heavily in our Hefty Waste & Storage and Hefty Tableware segments. Another customer was 11 % of total net revenues for the year ended December 31, 2025. Net revenues from this customer are in our Reynolds Cooking & Baking, Hefty Tableware and Presto Products segments. No other customers accounted for 10% or more…
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q1 2026 earnings release, May 2026 · Q1 2026 earnings commentary, May 2026 · Eastover project updates, May 2026 · Georgetown transition disclosures · dividend affirmation, Q1 2026 release · Q1 2026 disclosures, May 2026 · Eastover project updates, May 19, 2026 · Q1 2026 earnings release and commentary, May 2026 · dividend affirmation, 2026