Orchids Paper Products Company (TIS) seems undervalued at present, but the weakness of its business model - offering cheap products in lieu of well-known brands - does not enable it to compete well in the long-term with better-established companies that are trading at decent valuations.
Orchids' undervaluation results from the fact that it lost a lot of favor since their 2017 Q1 results were reported on May 1, 2017. Not only did Q1 EPS of -$0.08 miss estimates by $0.19, not only did Q1 revenue of $35.35 million miss estimates by $4.75 million, but they suspended their quarterly dividendpayments to shareholders. The justification was as follows:
Orchids is committed to our growth strategy of expanding capacity, expanding our markets and sales, and leveraging our low costs of production... the Board considered it prudent and the responsible course of action to suspend the quarterly dividend to preserve financial flexibility and ensure our capital is allocated to further the success of our business.
How has Orchids performed since last year?
| Quarter | Revenue ($) | Net Income ($) |
| 2017 Q1 | 35.35 million | -860,000 |
| 2017 Q2 | 38.44 million | -2.05 million |
| 2017 Q3 | 45.17 million | 705,000 |
| 2017 Q4 | 43.52 million | 8.88 million |
| Total 2017 | 162.48 million | 6.67 million |
So, there were significant improvements in the third and fourth quarters. However, 2018 Q1 saw a net income decrease, albeit with strong revenue.
| Quarter | Revenue ($) | Net Income ($) |
| 2018 Q1 | 48.25 million | -2.29 million |
And over the past year, the share price has also seen a significant decrease, having plummeted 74.71% from its 52-week high of $15.74.
