Interestingly, while shares of the company have slid significantly in the past couple of months, its financial performance has improved considerably during the same time. For the second quarter of 2015, while analysts were expecting the company to report a loss of $0.15 per share on revenue of $886 million, Resolute Forest Products Inc (NYSE:RFP) surprised the Street by reporting EPS of $0.07 on revenue of $926 million. Several analysts and experts that cover the stock believe that the major reason Resolute Forest Products Inc (NYSE:RFP) got crushed in the last few months was because investors overreacted to the ‘forestry crisis’ that emerged in Quebec’s North Shore region earlier this summer. However, with the company having reached an agreement with the Quebec government recently, under which the latter will compensate the former for the economic loss it suffered during the summer, there is hope among investors and people who track Resolute Forest Products Inc (NYSE:RFP)’s stock that it will do well in the short to medium-term. On July 10, analysts at three firms, namely Scotiabank, Societe Generale, and Howard Weil simultaneously upgraded the stock to ‘Sector Perform’ from ‘Underperform’.
Even though everything from hedge funds’ sentiment to the Quebec government’s aid package and analysts’ optimism seems to be going in favor of the stock, with one of its largest shareholders reducing its stake considerably, we believe that investors who find the stock attractive at the current valuations must exercise some caution before committing a large amount of capital to it.