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Why Intertape Polymer Shares Popped

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of packaging products company Intertape Polymer Group (TSX: ITP) surged 11% today after its quarterly results and outlook topped Bay Street expectations.

So what: The stock has skyrocketed over the past year on strong bottom line growth, and today’s Q2 results — EPS doubled year over year to $0.30 — coupled with upbeat guidance only reinforce that trend. While revenue slipped 2% over the year-ago period, gross margins increased 350 basis points to 21.8%, suggesting that its product mix, cost structure, and competitive position are all improving despite the slowdown.

Now what: For the current quarter, Intertape expects revenue to be slightly up sequentially and gross margins to keep improving, prompting management to take some shareholder-friendly actions. “The Board’s recent dividend declaration, which is double the previous annualized amount, and its decision to redeem the remaining Notes are supported by the Company’s continued financial improvements and positive outlook,” said President and CEO Greg Yull. Of course, with the stock now up about 130% from its 52-week lows, much of that optimism might already be baked into the valuation. 

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Fool contributor Brian Pacampara does not own shares in any of the companies mentioned at this time.  The Motley Fool does not own shares in any of the companies mentioned at this time.

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