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Why Is Berry Global (BERY) Up 12.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for Berry Global (BERY - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Berry Global due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Berry Global Q1 Earnings & Revenues Top Estimates
Berry Global reported better-than-expected first-quarter fiscal 2021 (ended Jan 2, 2021) results. Its earnings surpassed estimates by 20.43% — this being the sixth consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 7.58%.
The company’s adjusted earnings of $1.12 per share surpassed the Zacks Consensus Estimate of 93 cents. Also, the bottom line doubled from the year-ago number of 56 cents.
Revenue Details
In the quarter under review, Berry Global’s net sales were $3,136 million, reflecting year-over-year increase of 11.4%. The improvement was driven by 7% growth in organic volumes, positive impact of $50 million from favorable movements in foreign currencies and $112 million benefit from extra shipping days, partially offset by $15 million of divesture sales.
The top line surpassed the consensus estimate of $2,915 million.
The company reports results under four segments — Consumer Packaging–International, Consumer Packaging–North America, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of fiscal first-quarter segmental sales is provided below:
Consumer Packaging–International’s sales were $988 million compared with $930 million in the year-ago quarter. The increase was attributable to 4% growth in organic volumes and positive impact of $44 million from favorable movements in foreign currencies, partially offset by a $28 million adverse impact of decline in selling prices. It accounted for 31.5% of the quarter’s net sales.
Consumer Packaging–North America’s sales were $686 million, up 12.3% year over year. The increase was attributable to 8% rise in organic volumes and advantages of extra shipping days. It accounted for 21.9% of the quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $740 million, up 21.3% year over year. The improvement was driven by 15% increase in organic volumes and positive impact of $7 million from higher selling prices and advantages of extra shipping days. It accounted for 23.6% of the quarter’s net sales.
Revenues from Engineered Materials increased 8.6% year over year to $722 million. The rise was driven by 2% increase in organic volumes and positive impact of $7 million from favorable movements in foreign currencies and advantages of extra shipping days. It accounted for 23% of the quarter’s net sales.
Margin Profile
In the fiscal first quarter, Berry Global’s cost of goods sold increased 9.7% to $2,518 million. It represented 80.3% of net sales compared with 81.5% in the year-ago quarter. Selling, general and administrative expenses rose 5.2% to $241 million and represented 7.7% of net sales.
Adjusted operating income in the quarter increased 36.4% to $330 million. Also, adjusted operating margin came in at 10.5%, up 190 basis points year over year. Net interest expenses were $97 million, down 17.8%.
Balance Sheet & Cash Flow
Exiting fiscal first quarter, Berry Global’s cash and cash equivalents were $847 million, up 12.9% from $750 million in the previous quarter. Current and long-term debt decreased 1.5% to $10,081 million sequentially.
In the fiscal first quarter, the company repaid $985 million of borrowings. Its proceeds from borrowings totaled $750 million.
In the reported quarter, it generated net cash of $315 million from operating activities, up 44.5% from the year-ago quarter. Free cash flow in the quarter increased 119% to $153 million.
Outlook
For fiscal 2021 (ending September 2021), Berry Global anticipates witnessing organic sales growth of 4% on a year-over-year basis, with operating EBITDA in the range of $2.175-$2.225 billion.
For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,525-$1,625 million and capital expenditure of $650 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Berry Global has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Berry Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Berry Global (BERY) Up 12.3% Since Last Earnings Report?
A month has gone by since the last earnings report for Berry Global (BERY - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Berry Global due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Berry Global Q1 Earnings & Revenues Top Estimates
Berry Global reported better-than-expected first-quarter fiscal 2021 (ended Jan 2, 2021) results. Its earnings surpassed estimates by 20.43% — this being the sixth consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 7.58%.
The company’s adjusted earnings of $1.12 per share surpassed the Zacks Consensus Estimate of 93 cents. Also, the bottom line doubled from the year-ago number of 56 cents.
Revenue Details
In the quarter under review, Berry Global’s net sales were $3,136 million, reflecting year-over-year increase of 11.4%. The improvement was driven by 7% growth in organic volumes, positive impact of $50 million from favorable movements in foreign currencies and $112 million benefit from extra shipping days, partially offset by $15 million of divesture sales.
The top line surpassed the consensus estimate of $2,915 million.
The company reports results under four segments — Consumer Packaging–International, Consumer Packaging–North America, Health, Hygiene & Specialties, and Engineered Materials. A brief snapshot of fiscal first-quarter segmental sales is provided below:
Consumer Packaging–International’s sales were $988 million compared with $930 million in the year-ago quarter. The increase was attributable to 4% growth in organic volumes and positive impact of $44 million from favorable movements in foreign currencies, partially offset by a $28 million adverse impact of decline in selling prices. It accounted for 31.5% of the quarter’s net sales.
Consumer Packaging–North America’s sales were $686 million, up 12.3% year over year. The increase was attributable to 8% rise in organic volumes and advantages of extra shipping days. It accounted for 21.9% of the quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $740 million, up 21.3% year over year. The improvement was driven by 15% increase in organic volumes and positive impact of $7 million from higher selling prices and advantages of extra shipping days. It accounted for 23.6% of the quarter’s net sales.
Revenues from Engineered Materials increased 8.6% year over year to $722 million. The rise was driven by 2% increase in organic volumes and positive impact of $7 million from favorable movements in foreign currencies and advantages of extra shipping days. It accounted for 23% of the quarter’s net sales.
Margin Profile
In the fiscal first quarter, Berry Global’s cost of goods sold increased 9.7% to $2,518 million. It represented 80.3% of net sales compared with 81.5% in the year-ago quarter. Selling, general and administrative expenses rose 5.2% to $241 million and represented 7.7% of net sales.
Adjusted operating income in the quarter increased 36.4% to $330 million. Also, adjusted operating margin came in at 10.5%, up 190 basis points year over year. Net interest expenses were $97 million, down 17.8%.
Balance Sheet & Cash Flow
Exiting fiscal first quarter, Berry Global’s cash and cash equivalents were $847 million, up 12.9% from $750 million in the previous quarter. Current and long-term debt decreased 1.5% to $10,081 million sequentially.
In the fiscal first quarter, the company repaid $985 million of borrowings. Its proceeds from borrowings totaled $750 million.
In the reported quarter, it generated net cash of $315 million from operating activities, up 44.5% from the year-ago quarter. Free cash flow in the quarter increased 119% to $153 million.
Outlook
For fiscal 2021 (ending September 2021), Berry Global anticipates witnessing organic sales growth of 4% on a year-over-year basis, with operating EBITDA in the range of $2.175-$2.225 billion.
For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,525-$1,625 million and capital expenditure of $650 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Berry Global has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Berry Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.