Canfor Corporation (CFP.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

Canfor Corporation operates as an integrated forest products company in the United States, Asia, Canada, Europe, and internationally.It operates through two segments, Lumber, and Pulp and Paper.The company manufactures and sells finger-jointed lumber, engineered wood products, wood chips and pellets, and logs, as well as custom specialty products, including strength-rated trusses, beams, and tongue-and-groove timber; and generates green energy.

It also produces and sells pulp and paper products, including bleached and unbleached softwood kraft pulp, as well as bleached, colored, and unbleached kraft paper.The company was founded in 1938 and is headquartered in Vancouver, Canada.

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1.b. Last Insights on CFP

Canfor Corporation's recent performance was negatively impacted by steep, unwarranted, and punishing U.S. tariffs on Canadian imports, downgraded by Scotiabank to Underperform from Sector Perform. The company's Q4 2024 results showed revenue of CA$5.25b, down 3.2% from FY 2023, and a net loss. Despite a strategic shift towards long-term growth, tariff pressures continue to challenge the company's operations. This, combined with the analyst downgrades, has created a negative sentiment around Canfor's stock.

1.c. Company Highlights

Last Price	12.1
Change Percentage	1.68%
Open	11.89
Previous Close	11.9
Market Cap ( Millions)	1409
Volume	180061
Year High	17.05
Year Low	11.11
M A 50	12.15
M A 200	13.45

FCF Yield	-20.84%
Dividend Yield	0.00%
ROE	-20.03%
Debt / Equity	23.85%
Net Debt / EBIDTA	-186.11%
Price To Book	0.47
Price Earnings Ratio	-2.21
Price To FCF	-4.8
Price To sales	0.27
EV / EBITDA	-6.14

2. Canfor's Q3 2025 Results: Weak Lumber Market Conditions Weigh on Earnings

Canfor reported a challenging Q3 2025, with its lumber business generating an adjusted EBITDA loss of $2 million, a significant decline of $70 million compared to the prior quarter. The weak lumber market conditions, particularly for Southern Yellow Pine, and seasonal downtime in Europe were the primary drivers of this decline. The company's pulp business also reported an adjusted EBITDA loss of $2 million, $9 million lower than the prior quarter, due to lower pulp and paper sales realizations. The actual EPS came out at -$1.48, missing estimates of -$1.01244. Revenue growth is expected to be 2.1% next year, according to analyst estimates. Canfor's balance sheet remains strong, with over $1.2 billion of available liquidity, and the company completed the acquisition of 3 sawmills in Sweden for $171 million, increasing its diversification and reducing its exposure to duties and tariffs.

Publication Date: Nov -29

                                    📋 Highlights
                                    Lumber EBITDA Loss:
                                                Adjusted EBITDA loss of $2 million, a $70 million decline QoQ, driven by weak lumber market conditions and seasonal European downtime.
Pulp EBITDA Loss:
                                                Adjusted EBITDA loss of $2 million, $9 million lower QoQ, due to reduced pulp and paper sales realizations.
Strong Liquidity:
                                                Canfor maintains $1.2 billion in available liquidity, supporting strategic initiatives and operational resilience.
Sweden Acquisition:
                                                Completed $171 million acquisition of three Swedish sawmills, reducing tariff exposure to 15% of production capacity.
Pulp Market Outlook:
                                                Pulp market remains oversupplied; requires 1–1.5 million tonnes of supply reduction to achieve balance, with Canfor implementing cost-cutting measures.

                                

Financial Performance

The company's financial performance was under pressure due to weak market conditions. The adjusted EBITDA loss in the lumber business was significant, and the pulp business also struggled with lower sales realizations. The EPS miss was substantial, indicating a challenging quarter for the company. The valuation metrics indicate that the company is trading at a discount, with a P/E Ratio of -2.25, P/B Ratio of 0.48, and P/S Ratio of 0.27. The EV/EBITDA ratio is -6.22, indicating that the company's enterprise value is not justified by its EBITDA. The ROIC and ROE are both negative, at -14.45% and -20.03%, respectively, highlighting the company's struggles.

Operational Highlights

Despite the challenging market conditions, Canfor's North American lumber operations saw improved price realizations due to a broader go-to-market strategy and optimized product mix. The European business is currently experiencing log cost pressure and inventory devaluation, but the company expects market conditions to improve. Canfor is focusing on controllable factors, working to strengthen its portfolio, and positioning itself for growth opportunities. As Susan Yurkovich noted, the company is pleased with its current asset mix and doesn't intend to make further changes to its BC portfolio.

Outlook and Valuation

The industry faces significant external market forces, and the question is whether sector consolidation is necessary. Canfor is actively negotiating with lenders around additional covenant relief for Canfor Pulp. The pulp market conditions are expected to remain challenged due to excess capacity supply, and a healthier market will require a material reduction in supply. The company's valuation metrics indicate that it is trading at a discount, but the negative ROIC and ROE highlight the company's struggles. The P/S Ratio of 0.27 and EV/EBITDA of -6.22 suggest that the company's valuation is not justified by its financial performance.

3. NewsRoom

Canfor Corporation to acquire Canfor Pulp

Dec -04

Source:

Canfor Pulp Amends Existing Credit Facility

Dec -03

Source:

CIBC Says "High-cost" Lumber Producers Thrown Lifeline

Nov -27

Source:

Progress in Cutting Losses and Higher Sales Might Change the Case for Investing in Canfor (TSX:CFP)

Nov -17

Source:

Canfor (TSX:CFP) Valuation in Focus After Q3 Results Signal Ongoing Recovery

Nov -16

Source:

TSX Growth Stocks With High Insider Ownership Led By Black Diamond Group

Nov -07

Source:

Canfor Pulp Products Inc (CFPUF) Q3 2025 Earnings Call Highlights: Navigating Challenges with ...

Nov -06

Source:

Canfor Corp (CFPZF) Q3 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...

Nov -06

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.32%)

6. Segments

Lumber

Expected Growth: 6%

Canfor Corporation's lumber segment growth is driven by increasing demand from the US housing market, supported by low interest rates and government incentives. Additionally, the company's strategic acquisitions and investments in modernizing its mills have improved operational efficiency, allowing it to capitalize on rising lumber prices.

Pulp & Paper

Expected Growth: 8%

Canfor Corporation's Pulp & Paper segment growth is driven by increasing demand for sustainable packaging, rising e-commerce sales, and growing need for tissue products. Additionally, the company's strategic investments in modernizing its mills, improving operational efficiency, and expanding into new markets have contributed to its 8% growth.

7. Detailed Products

Lumber

Softwood lumber products, including dimension lumber, timbers, and specialty products

Pulp and Paper Products

A range of pulp and paper products, including kraft paper, packaging paper, and tissue products

Specialty Panels

Engineered wood products, including oriented strand board (OSB) and plywood

Bioenergy

Renewable energy products, including bio-oil and bio-carbon

Forestry and Logging

Sustainable forestry and logging operations, including tree planting, harvesting, and silviculture

8. Canfor Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Canfor Corporation is medium due to the availability of alternative products such as recycled paper and digital media.

Bargaining Power Of Customers

The bargaining power of customers for Canfor Corporation is low due to the company's strong brand reputation and diversified customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Canfor Corporation is medium due to the company's dependence on a few large suppliers for raw materials.

Threat Of New Entrants

The threat of new entrants for Canfor Corporation is low due to the high barriers to entry in the forestry industry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry for Canfor Corporation is high due to the competitive nature of the forestry industry, with many established players competing for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	7.31%
Debt Cost	12.39%
Equity Weight	92.69%
Equity Cost	14.87%
WACC	14.69%
Leverage	7.89%

11. Quality Control: Canfor Corporation passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Jewett-Cameron Trading

A-Score: 4.3/10

Value: 9.8

Growth: 4.4

Quality: 4.5

Yield: 0.0

Momentum: 5.0

Volatility: 2.0

1-Year Total Return ->

Clearwater Paper

A-Score: 4.1/10

Value: 9.3

Growth: 4.7

Quality: 5.9

Yield: 0.0

Momentum: 1.0

Volatility: 3.7

1-Year Total Return ->

Canfor

A-Score: 4.0/10

Value: 9.8

Growth: 1.9

Quality: 3.2

Yield: 0.0

Momentum: 2.0

Volatility: 7.3

1-Year Total Return ->

Mativ

A-Score: 3.9/10

Value: 9.0

Growth: 1.9

Quality: 1.8

Yield: 8.0

Momentum: 1.0

Volatility: 2.0

1-Year Total Return ->

Glatfelter

A-Score: 3.8/10

Value: 7.1

Growth: 4.8

Quality: 2.5

Yield: 1.0

Momentum: 4.0

Volatility: 3.7

1-Year Total Return ->

Interfor

A-Score: 3.5/10

Value: 8.3

Growth: 3.9

Quality: 1.9

Yield: 1.0

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

27.00%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

14.69%

Canfor Corporation - CA1375761048

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CFP

1.c. Company Highlights

Cheaper

Weak Momentum

Lower Growth

Earnings Beats

Revenues Beats

Earnings Miss

Higher Growth

Lower Quality

Less Volatile

Medium Volatility

2. Canfor's Q3 2025 Results: Weak Lumber Market Conditions Weigh on Earnings

Financial Performance

Operational Highlights

Outlook and Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.32%)

6. Segments

Lumber

Expected Growth: 6%

Pulp & Paper

Expected Growth: 8%

7. Detailed Products

Lumber

Pulp and Paper Products

Specialty Panels

Bioenergy

Forestry and Logging

8. Canfor Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Canfor Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.1$

Current Price

12.1$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA