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Why Is WestRock (WRK) Down 2.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for WestRock (WRK - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WestRock due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
WestRock Q2 Earnings & Sales Miss Estimates, Down Y/Y
WestRock reported second-quarter fiscal 2021 adjusted earnings of 54 cents per share, down from the 67 cents recorded in the year-ago period. Also, the fiscal second-quarter earnings missed the Zacks Consensus Estimate of 62 cents.
Including one-time items, earnings came in at 42 cents per share compared with the 57 cents reported in the prior-year quarter.
Operational Update
WestRock’s total revenues edged down 0.2% year over year to $4,438 million. The revenue figure also missed the consensus mark of $4,498 million. This decline was mainly due to the impact of ransomware incident and winter weather.
Cost of sales was up 1.2% year on year to $3,688 million during the fiscal second quarter. Gross profit slid 6.8% year over year to $749.6 million. Adjusted segment EBITDA was $641 million compared with the $708 million witnessed in the year-earlier quarter. Total segment income came in at $286.5 million, down from the year-ago quarter’s $335.3 million.
Segmental Performance
Corrugated Packaging: Sales in the segment were up 1% year over year to $2,913 million during the March-end quarter primarily on higher selling price/mix, partly offset by unfavorable impacts of foreign-currency translation and lower volumes. Adjusted segment EBITDA decreased 12.7% year over year to $438 million.
Consumer Packaging: Sales in the segment went down 1.6% year on year to $1,589.9 million. This downside resulted from lower volumes that were partly offset by favorable foreign-currency impacts and higher selling price/mix. Adjusted segment EBITDA fell 4.5% year over year to $212 million.
Financial Position
WestRock had cash and cash equivalents of $334 million as of Mar 31, 2021, up from $251 million reported as of Sep 30, 2020. The company reported total debt of $8.94 billion as of Mar 31, 2021, down from $9.43 billion as of Sep 30, 2020.
Net cash provided by operating activities for second-quarter fiscal 2021 was $132 million as compared with the $168 million recorded in the prior-year quarter. During the fiscal second quarter, WestRock invested $132 million in capital expenditures, paid out $53 million in dividends to stockholders and received proceeds of $59 million from the sale of the Summerville, SC sawmill.
On Jan 25, the company reported a ransomware incident affecting certain of its operational and information technology systems. During the fiscal second quarter, the company lost approximately 167,000 tons of containerboard and paperboard production due to the event.
The company also incurred around $20 million of ransomware recovery costs. It expects to recover the ransomware losses from cyber and business interruption insurance in the future.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.86% due to these changes.
VGM Scores
Currently, WestRock has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. 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, WestRock 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 WestRock (WRK) Down 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for WestRock (WRK - Free Report) . Shares have lost about 2.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is WestRock due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
WestRock Q2 Earnings & Sales Miss Estimates, Down Y/Y
WestRock reported second-quarter fiscal 2021 adjusted earnings of 54 cents per share, down from the 67 cents recorded in the year-ago period. Also, the fiscal second-quarter earnings missed the Zacks Consensus Estimate of 62 cents.
Including one-time items, earnings came in at 42 cents per share compared with the 57 cents reported in the prior-year quarter.
Operational Update
WestRock’s total revenues edged down 0.2% year over year to $4,438 million. The revenue figure also missed the consensus mark of $4,498 million. This decline was mainly due to the impact of ransomware incident and winter weather.
Cost of sales was up 1.2% year on year to $3,688 million during the fiscal second quarter. Gross profit slid 6.8% year over year to $749.6 million. Adjusted segment EBITDA was $641 million compared with the $708 million witnessed in the year-earlier quarter. Total segment income came in at $286.5 million, down from the year-ago quarter’s $335.3 million.
Segmental Performance
Corrugated Packaging: Sales in the segment were up 1% year over year to $2,913 million during the March-end quarter primarily on higher selling price/mix, partly offset by unfavorable impacts of foreign-currency translation and lower volumes. Adjusted segment EBITDA decreased 12.7% year over year to $438 million.
Consumer Packaging: Sales in the segment went down 1.6% year on year to $1,589.9 million. This downside resulted from lower volumes that were partly offset by favorable foreign-currency impacts and higher selling price/mix. Adjusted segment EBITDA fell 4.5% year over year to $212 million.
Financial Position
WestRock had cash and cash equivalents of $334 million as of Mar 31, 2021, up from $251 million reported as of Sep 30, 2020. The company reported total debt of $8.94 billion as of Mar 31, 2021, down from $9.43 billion as of Sep 30, 2020.
Net cash provided by operating activities for second-quarter fiscal 2021 was $132 million as compared with the $168 million recorded in the prior-year quarter. During the fiscal second quarter, WestRock invested $132 million in capital expenditures, paid out $53 million in dividends to stockholders and received proceeds of $59 million from the sale of the Summerville, SC sawmill.
On Jan 25, the company reported a ransomware incident affecting certain of its operational and information technology systems. During the fiscal second quarter, the company lost approximately 167,000 tons of containerboard and paperboard production due to the event.
The company also incurred around $20 million of ransomware recovery costs. It expects to recover the ransomware losses from cyber and business interruption insurance in the future.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.86% due to these changes.
VGM Scores
Currently, WestRock has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. 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 C. 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, WestRock has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.