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Svenska Cellulosa Aktiebolaget SCA (publ)

SCA-A.ST

Paper, Lumber & Forest Products · Basic Materials

Price

kr 100.50

+2.10 (+2.13%)

Market Cap

kr 70.59B

Exchange

Stockholm Stock Exchange

Winston Score

Winston is curious

Mixed quality — meaningful strengths and weaknesses.

Winston Score between 40 and 70. The stock passes some quality checks but not all.

Svenska Cellulosa Aktiebolaget, known as SCA, is a Swedish company that owns and manages forests, then turns that wood into products like paper, cardboard packaging, and timber. It is one of the largest private forest owners in Europe, controlling roughly 2.6 million hectares of forestland in Sweden. Its customers include packaging companies, construction firms, and industrial buyers across Europe.

SCA makes money by selling timber, pulp, paper-based packaging materials, and renewable energy generated from forest biomass. The company operates mainly in Sweden and Northern Europe, and its massive land holdings give it a significant cost advantage over competitors who must buy raw materials on the open market. The key growth driver is rising demand for sustainable, wood-based packaging as companies shift away from plastic, but the main risk is that low margins leave the business vulnerable to drops in commodity prices for pulp and paper products.

Winston Score History

Score breakdown

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Quality

Gross Margin

63.4%

Premium pricing power — 63.4% gross margin

Operating Margin

10.6%

Modest — 10.6% operating margin

ROCE

0.4%

Weak — 0.4% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

-4.0%

Shrinking sales (-4.0% YoY)

EPS YoY

-23.8%

Earnings shrinking (-23.8% YoY)

Earnings per share down more than 10%. Either a bad year, or a real decline.

EPS Consistency

2/8 quarters

Earnings rarely grow — volatile business

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Cash Flow

Cash Conversion

146%

Turns 146% of profit into real cash

FCF Margin

9.7%

Modest free cash flow (9.7%)

FCF margin between 0% and 10%. Some cash from sales, but not a lot.

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Stability

Debt / Equity

0.16

Conservative — low debt load (0.16)

Interest Cover

5.38x

Adequate interest coverage (5.4x)

Interest coverage between 3 and 8. Profits cover interest several times over.

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Valuation

P/E Ratio

23.8x

Growth-priced — P/E 23.8

P/E above the market average. People are paying up for expected growth.

P/E vs Forward

+5.5

GROWING

Earnings expected to grow meaningfully — cheaper on forward P/E (23.8 → 18.3)

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Dividends

Dividend Yield

2.96%

Moderate income — 2.96% yield

Standard yield zone for stable dividend payers. A meaningful piece of total return.

Dividend Growth

+32.4%

Dividend growing fast (32.4% YoY)

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