CLW · Clearwater Paper
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $16.86
Note written ·
Price against the kill line
13.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $16.86, on record since 11 November 2026. The shares are down 29.4% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $16.86, above the 200-day average of closes, which would show the shares leading the S&P 500 again. Fourth-quarter adjusted EBITDA above the $20 million top of the guide would also show the shares leading.
Research onlyNot in the portfolio.
Last catalyst
Key figures from the filings · Materials
Quarter to 30 September 2026, filed 26 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 385
- Revenue, change on a year (%)
- −3.5
- Gross margin (%)
- 5.5
- Operating margin (%)
- 0.6
- Free cash flow, four quarters ($M)
- 56.8
- Net cash, cash less debt ($M)
- −238
- Price to earnings (×)
- 97.9
- Enterprise value to sales (×)
- 0.3
All filed numbers
What Clearwater Paper reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 385 | −3.5 | 5.5 | 0.6 |
| first filed | 375 | −4.3 | −2.8 | −6.4 |
| first filed | 360 | −4.7 | −0.2 | −2.9 |
| first filed | 386 | −0.2 | 4.5 | 1.9 |
| first filed | 399 | +1.4 | 4.7 | −13.9 |
| first filed | 392 | +13.8 | 11.0 | 2.5 |
| Pre-tax income ($M) | Not reported |
| Net income ($M) four quarters: 2.4 | −1.6 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | 0.0 |
| Operating cash flow ($M) | 105 |
| Capital spending ($M) | 48.3 |
| Free cash flow ($M) | 56.8 |
| Cash and short-term investments ($M) | 35.7 |
| Debt ($M) long-term debt | 274 |
| Net cash, cash less debt ($M) | −238 |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 163 |
| Inventory ($M) | 250 |
| Shareholders' equity ($M) | 794 |
| Market value ($M) | 235 |
| Enterprise value, market value plus net debt ($M) | 473 |
| Enterprise value to sales (×) | 0.3 |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | 97.9 |
| Price to book value (×) | 0.3 |
| Free-cash-flow yield (%) | 24.2 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 3.9% of shares outstanding sold short, 5.3 days of average trading to cover, +0.7% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $0 | $161K |
The thesis
Clearwater Paper's paperboard price increases are reaching its invoices, but the Augusta, Georgia mill failures and a fourth-quarter earnings guide below the third quarter leave the shares more likely to lag the S&P 500 than lead it. The fourth-quarter 2026 report decides whether adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) lands inside the $10–20 million guide.
The 26 October 2026 report met the old test: third-quarter adjusted EBITDA was $24 million, inside the $20–30 million guide. The market looked past it to the fourth-quarter outlook. The shares closed at $13.90 on 11 November 2026, with a 3-month change of −36.7% and a 52-week intraday high of $23.59 on 7 August 2026.
Attention has moved from industry pricing to operations. Chief financial officer Sherri Baker's resignation takes effect on 13 November 2026 (Panabee), and law firms announced investigations into the company on 5 November 2026. No successor has been named in the sources reviewed.
Bullish and bearish views on Clearwater Paper Corporation
The bull case on Clearwater Paper Corporation (CLW), in brief: price increases are reaching Clearwater. The bear case: the fourth-quarter guide steps down.
Bull case
- Price increases are reaching Clearwater. Paperboard net selling price was $1,111 per ton in the third quarter, up $34 from $1,077 in the second quarter and down 4% year over year (Clearwater Q3 results, 26 October 2026). Call coverage on Finviz put the first $60-per-ton increase at more than $70 million a year once fully implemented, with a second $60 increase worth $30–40 million in 2027.
- The balance sheet is termed out. Net debt fell $56 million year to date to $260.7 million, and the $275 million term loan and $200 million revolver mature in 2031 (Finviz call summary, 26 October 2026; company announcement, 21 September 2026).
- Insurance and legal recourse exist. Clearwater received the fourth and final $17.5 million representation-and-warranty insurance payment in the third quarter, bringing the total to $73 million of a $105 million policy (Packaging Dive, 27 October 2026). CEO Arsen Kitch said some seller representations in the 2024 Augusta purchase from Graphic Packaging were "either incomplete or inaccurate" and that the company is examining recourse.
- Some brokers still lean positive. RBC Capital kept Outperform and cut its target to $22 on 27 October 2026, after the report (Benzinga). Truist's $17 target and TD Cowen's Hold rating, both reiterated after the report, are the cautious end.
- Management is meeting investors. Clearwater announced on 10 November 2026 that it will take part in the 2026 RBC Capital Markets Global Industrials Conference, giving a platform to explain the Augusta repair plan.
Bear case
- The fourth-quarter guide steps down. Management guided adjusted EBITDA to $10–20 million, below the third quarter's $24 million, citing seasonal volume, Augusta disruption and a $5–7 million outage at the Cypress Bend mill (company outlook, 26 October 2026, via Quartr and Finviz).
- Augusta is a recurring problem. Electrical and mechanical failures hit the pulp, power and recovery areas in late September and early October, after the mill ran 10–15% below desired output for several quarters (Packaging Dive, 27 October 2026). A January 2027 outage is estimated at $12–15 million, more downtime of $7–10 million is likely in the second or third quarter of 2027, and management expects to invest more capital in conditions not found in due diligence.
- The quarter missed on earnings and sales. Adjusted loss was $0.23 per share against a $0.14 loss estimate, and sales of $385.0 million trailed the $387.387 million estimate (Benzinga, 26 October 2026). The third-quarter net loss was $2 million (Packaging Dive).
- Management and legal noise. The CFO leaves on 13 November 2026, and law-firm investigation notices appeared on 5 November 2026. No complaint has been confirmed in the sources reviewed.
- Price targets sit above the shares. Truist's target is $17 (Hold) and RBC's is $22, both set on 27 October 2026, and both are above the $13.90 close. Cuts after a report show analysts lowered their earnings paths.
Price setup
- Last close: $13.90 on 11 November 2026, 41.1% below the 52-week intraday high of $23.59 set on 7 August 2026. Recent closes were $14.05 on 4 November 2026, $13.21 on 9 November 2026 and $13.89 on 10 November 2026.
- Moving averages: As of 11 November 2026 the 50-day average of closes is $18.4, and the 200-day average sits above the last close as well. The shares trade under both after the post-report fall.
- Prior low: The 52-week closing low is $12.44, set on 20 March 2026. The 9 November 2026 close of $13.21 came within about $0.77 of it.
- What the price reflects: At $13.90 the shares discount the fourth-quarter guide and Augusta costs. Market capitalization was about $311 million on 19 October 2026 (MarketBeat), before the post-report fall.
- Insider activity: The only Form 4 itemised since August shows Baker had 4,634 shares withheld for tax at $21.42 on 15 August 2026, filed 18 August 2026. It was a withholding, not an open-market sale.
Catalysts ahead
- ~30 November 2026 (est.): Fastmarkets RISI recognition of the second $60-per-ton paperboard price increase. Recognition would support the $30–40 million 2027 benefit that management described.
- ~18 February 2027 (est.): Fourth-quarter 2026 results. Shows whether adjusted EBITDA lands inside the $10–20 million guide and whether Augusta costs and the January 2027 outage estimate have grown.
Elapsed catalysts
- 13 November 2026: CFO Sherri Baker's resignation takes effect. A named successor or interim CFO shows whether reporting continuity holds through the Augusta repairs. (passed)
What would change the view
A daily close above $16.86, above the 200-day average of closes, which would show the shares leading the S&P 500 again. Fourth-quarter adjusted EBITDA above the $20 million top of the guide would also show the shares leading.
What it trades with
Clearwater is a small paperboard producer, so its shares follow US folding-carton and packaging pricing, bleached paperboard supply decisions by competitors, and energy and chemical costs more than the broad market. Its modest market value means one report or one outage estimate can move the shares sharply. Augusta and legal developments can outweigh sector moves in either direction.
The evidence, claim by claim (8)
- Third-quarter 2026 adjusted EBITDA from continuing operations was $24 million, inside the $20–30 million guide; net sales were $385 million. Clearwater Paper Q3 2026 results via Quartr summary · as of
- Paperboard net selling price was $1,111 per ton, down 4% year over year and up from $1,077 per ton in the second quarter. Clearwater Paper Q3 2026 results via Quartr summary · as of
- Fourth-quarter 2026 adjusted EBITDA guided to $10–20 million, citing Augusta disruption and a $5–7 million Cypress Bend outage. Clearwater Paper Q3 2026 outlook via Quartr and Finviz summaries · as of
- Augusta had electrical and mechanical failures in late September and early October; a January 2027 outage is estimated at $12–15 million. Packaging Dive · as of
- Final $17.5 million representation-and-warranty insurance payment received in the third quarter, for a total of $73 million of a $105 million policy. Packaging Dive · as of
- Third-quarter adjusted EPS was $(0.23) against a $(0.14) estimate; sales of $385.0 million missed a $387.387 million estimate. Benzinga · as of
- RBC Capital maintained Outperform with a $22 target; Truist Securities maintained Hold with a $17 target. Benzinga analyst ratings news · as of
- CFO Sherri Baker's resignation is effective 13 November 2026. Panabee report on Q3 2026 results · as of
Sources
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