One-glance verdict
Undervalued
$13.37 our estimate vs market $0.32
Wall Street consensus: $0.51 (-96.2% lower than our fair-value estimate)
98% below our estimate, below the bear case
Fundamentals snapshot
Mercer International Inc.
MERC · NMS · Basic Materials · Paper & Paper Products
Current price
$0.32
52-week range
$0.31 - $2.96
Market cap
$21.45M
Balance sheet
Distressed
-1.59x Concerning
Net debt $1.56B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
3 Risks
1 rewards · 3 risks
- Reward Free cash flow was positive in 7/10 years.
- Risk Return on equity was -296.9% last year — the company lost money on shareholders' equity.
- Risk Net debt grew 41.8% over 3 years.
- Risk Operating margin compressed from 17.2% to -12.7% over 3 years.
What this company does
Mercer International Inc.
Mercer International's main business is making and selling pulp, the raw ingredient used to create paper, to customers around the world. The company also sells lumber and generates green electricity from wood waste, meaning its financial success is closely tied to the global prices of pulp and wood.
How the company got here
Founded in 1968, Mercer International began a significant transformation in the 1990s, shifting its focus to become a pure-play pulp and paper manufacturer. A key turning point was the 1994 acquisition of the Rosenthal pulp mill in Germany, which the company saw as a competitive opportunity. Over the years, Mercer has grown by acquiring other mills and expanding its operations in Canada and Germany, solidifying its position in the global pulp market. More recently, the company has been expanding into the solid wood products market, including lumber and mass timber, through strategic acquisitions.
What it actually does
Mercer International is a global forest products company that takes wood from sustainably managed forests and turns it into a variety of products. Think of them as a large-scale recycler of wood, creating everything from the raw materials for paper products to lumber for construction. They also produce green energy (electricity created from renewable sources) and other biochemicals as byproducts of their manufacturing process. Their customers range from large paper manufacturers to construction firms and home centers.
Pulp
This is Mercer's largest business segment, generating the majority of its revenue (the total amount of money a company brings in from sales). The company produces different types of wood pulp, which is the raw material used to make paper products like tissues, writing paper, and packaging. They sell this pulp to other manufacturers who then create the final paper goods you see on store shelves. As part of the pulp-making process, they also generate and sell electricity and natural chemicals.
Solid Wood
This is a growing part of Mercer's business that involves manufacturing and selling lumber and other wood products. This includes traditional lumber for building, wood pallets for shipping goods, and innovative products like mass timber, which are large, engineered wood panels used in construction. They also produce biofuels (a type of fuel derived from plant matter) from wood residuals (the leftover bits of wood from the manufacturing process). This segment sells to a variety of customers, including distributors, construction firms, and retail yards.
What management is betting on now
Mercer's leadership is focused on sustainable growth and expanding its range of bio-based products. A key part of their strategy is 'synergistic diversification,' which means they are looking for opportunities to grow in areas that complement their existing businesses, like the recent expansion into mass timber. They are also investing in the 'circular economy' (an economic system aimed at eliminating waste and the continual use of resources) by finding new ways to use byproducts from their manufacturing processes, such as lignin, a component of wood with various industrial applications. The company aims to maintain a strong financial position to weather market downturns and fund future growth.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-41.21M
FY2024 Q4
$50.45M
FY2025 Q1
$-23.07M
FY2025 Q2
$-28.86M
FY2025 Q3
$-60.07M
FY2025 Q4
$32.00M
FY2026 Q1
$-98.83M
FY2026 Q2
$-27.28M
Revenue
$460.28M
Net income
$-75.98M
Diluted EPS
-1.13
Operating cash flow
$-15.12M
Free cash flow
$-27.28M
Fetching…
Sources
Revenue
$489.30M
Net income
$-52.00M
Diluted EPS
-0.78
Operating cash flow
$-85.67M
Free cash flow
$-98.83M
Fetching…
Sources
Revenue
$449.50M
Net income
$-308.70M
Diluted EPS
-4.61
Operating cash flow
$46.16M
Free cash flow
$32.00M
Fetching…
Sources
Revenue
$458.07M
Net income
$-80.78M
Diluted EPS
-1.21
Operating cash flow
$-30.05M
Free cash flow
$-60.07M
Fetching…
Sources
Revenue
$453.52M
Net income
$-86.07M
Diluted EPS
-1.29
Operating cash flow
$-4.53M
Free cash flow
$-28.86M
Fetching…
Sources
Revenue
$506.97M
Net income
$-22.34M
Diluted EPS
-0.33
Operating cash flow
$-2.99M
Free cash flow
$-23.07M
Fetching…
Sources
Revenue
$488.40M
Net income
$16.71M
Diluted EPS
0.25
Operating cash flow
$71.16M
Free cash flow
$50.45M
Fetching…
Sources
Revenue
$502.14M
Net income
$-17.56M
Diluted EPS
-0.26
Operating cash flow
$-13.95M
Free cash flow
$-41.21M
Fetching…
Sources
Is it cheap or expensive?
Fair value $13.37 vs current price $0.32
Wall Street consensus is the average analyst price target: $0.51 (-96.2% lower than our fair-value estimate).
Our most-likely fair value is $13.37 a share — about 4,077.0% above today's price of $0.32, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Distressed
Net debt $1.6B. Interest coverage -1.6x.
Net debt
$1.56B
Interest coverage
-1.59x
Mercer International Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Distressed
Worse cushion
Baseline
Better cushion
MERC
BASELINE
Mercer International Inc.
Total debt $1.64B Interest coverage -1.59x This is the baseline the peer rows are being compared against.
Total debt $373.10M Interest coverage 0.74x This peer still has a real interest-payment cushion, while MERC does not.
Total debt $1.03B Interest coverage 5.53x This peer still has a real interest-payment cushion, while MERC does not.
Total debt $549.25M Interest coverage 8.39x This peer still has a real interest-payment cushion, while MERC does not.
Total debt $377.00M Interest coverage 18.50x This peer still has a real interest-payment cushion, while MERC does not.
Total debt $391.00M Interest coverage -25.00x Neither company has much profit cushion over interest right now.
What you should know
The case for and against MERC
1 Reward
3 Risks
Rewards
-
Free cash flow was positive in 7/10 years.
Risks
-
Return on equity was -296.9% last year — the company lost money on shareholders' equity.
-
Net debt grew 41.8% over 3 years.
-
Operating margin compressed from 17.2% to -12.7% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
-0.23x
P/B
-0.22x
P/S
0.01x
EV/EBITDA
-26.93x
PEG ratio
2.29x
Profitability
How much profit each dollar creates
Gross margin
2.8%
Operating margin
-12.7%
Net margin
-27.9%
ROE
-296.9%
ROA
-6.5%
Health
Liquidity and balance-sheet strength
Debt / equity
—
Current ratio
1.30x
Quick ratio
0.65x
Total debt
$1.64B
Total cash
$78.78M
Growth
How the business has been compounding
Revenue TTM
$1.86B
Revenue 5Y CAGR
0.9%
EPS TTM
-7.73
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$-84.68M
Free CF TTM
$-80.00M
FCF margin
-4.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2025-06-26