Earnings estimates for Schweitzer-Mauduit International, Inc. (SWM) have been steady over the past month, but that could change in the near future as this diversified producer of premium specialty papers just raised its full-year outlook.

SWM is a top-performing Zacks #1 Rank company on Wednesday with shares that have increased more than 9%. Volume is well above normal at 551,000, compared to the daily average of more than 245,000.

The Zacks Consensus Estimate for this year is $3.75 per share, which is only a penny higher than 2 months ago but is 7.1% better than 3 months ago.

In addition, the Zacks Consensus Estimate for next year is pegged at $4.70, accounting for a gain of 5.6% in 2 months and as much as 843% in 3 months.

Q3 Helped by Higher-Value Products

Yesterday, Schweitzer-Mauduit International announced third-quarter earnings per share of $1.39, excluding items. The result surpassed the Zacks Consensus Estimate of 93 cents by nearly 50%. In the year-ago quarter, SWM reported 54 cents, excluding items.

This was the second straight quarter of better-than-expected earnings.

Net sales declined 7% to $184.5 million.

SWM attributed the quarter’s results to the continuing success of its restructuring initiatives to transform its core manufacturing operations toward higher-value products.

“We are focused in the near term on successfully executing the remaining restructuring activities, continuing to grow our reconstituted tobacco leaf (RTL) and Low Ignition Propensity (LIP) business franchises, and sustaining profitable operations at our Chinese paper joint venture, CTM,” said Chairman/CEO Frederic Villoutreix.

Mr. Villoutreix also announced a $117 million investment to establish a wholly-owned greenfield RTL production facility in the Philippines.

Raised Guidance

Earnings estimates for Schweitzer-Mauduit International may be breaking through the rust and moving higher soon.

In its quarterly report, the company said it now expects 2009 earnings per share of ‘at least’ $4, excluding items. This is above the previously-mentioned Zacks Consensus Estimate of $3.75 and also marks an advance from its previous outlook.

For 2010, it expects approximately $5, which is also above the Zacks Consensus Estimate.

There are currently 4 covering analysts for each period.

Zacks Investment Research

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