A month has gone by since the last earnings report for Berry Global (BERY Quick QuoteBERY - Free Report) . Shares have lost about 3.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Berry Global 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 catalysts.

Berry Global Q3 Earnings Top Estimates, Revenues Miss

Berry Global Group, Inc. reported mixed results for third-quarter fiscal 2022 (ended June 2022). BERY’s earnings beat the Zacks Consensus Estimate by 3.6%, whereas sales missed the same by 2.5%.

In the reported quarter, Berry Global’s adjusted earnings were $2.03 per share, beating the Zacks Consensus Estimate of $1.96. On a year-over-year basis, the bottom line increased 32.7% from the year-ago quarter’s figure of $1.53 on sales improvement.

Revenue Details

In the quarter under review, BERY’s net sales were $3,726 million, reflecting year-over-year growth of 1%. Effective pricing increased sales by $301 million, partially offset by $151 million of forex and $16 million of divestiture impacts. Lower volumes left a negative impact of 2%.

Berry Global’s top line missed the Zacks Consensus Estimate of $3,823 million.

BERY reports results under four segments, namely Consumer Packaging, International, Consumer Packaging — North America, Health, Hygiene & Specialties, and Engineered Materials.

A brief snapshot of segmental sales for the fiscal third quarter is provided below:

Consumer Packaging – International sales were $1,096 million, up 12% from the year-ago quarter’s level. The results benefited from effective pricing actions, which boosted sales $138 million. However, divestitures and forex woes had adverse impacts of $16 million and $99 million, respectively. The segment accounted for 29.4% of the quarter’s net sales.

Consumer Packaging – North America’s sales were $926 million, increasing 9% year over year. The metric accounted for 24.9% of the quarter’s net sales.

Revenues generated from Health, Hygiene & Specialties amounted to $788 million, down 3% year over year due to a 3% volume decline and a $17-million adverse impact from forex woes. The segment accounted for 21.1% of the quarter’s net sales.

Revenues from Engineered Materials grew 5% year over year to $915 million. Increased pricing boosted sales $81 million. Volume declines lowered sales 4% and a $35-million adverse impact from forex woes was worrisome. The segment accounted for 24.6% of the quarter’s net sales.

Margin Profile

In the fiscal third quarter, Berry Global’s cost of goods sold increased 1.8% to $3,105 million. The metric represented 83.3% of net sales compared with 83% in the year-ago quarter. Selling, general and administrative expenses increased 3.9% to $215 million and represented 5.8% of net sales.

Operating earnings before interest, tax, depreciation and amortization (EBITDA) were $550 million, down 3% year over year. The EBITDA margin was 14.8% compared with 15.4% in the year-ago quarter.

Adjusted operating income in the quarter decreased 1.7% year over year to $347 million. Adjusted operating margin was 9.3%, down 30 basis points. Interest expenses, net, were $70 million, down 7.9% year over year. Labor issues, supply-chain woes and cost inflation were spoilsports in the quarter.

Balance Sheet and Cash Flow

While at the time of exiting third-quarter fiscal 2022, Berry Global’s cash and cash equivalents were $527 million, down 51.7% from $1,091 million at the end of fourth-quarter fiscal 2021 (ended September 2021). Current and long-term debt increased 0.5% to $9,503 million from $9,460 million reported at the end of fourth-quarter fiscal 2021.

In the first nine months of fiscal 2021, BERY repaid $16 million of long-term borrowings.

In the fiscal third quarter, Berry Global generated net cash of $359 million for its operating activities compared with net cash of $274 million generated in the year-ago fiscal quarter. Capital expenditure totaled $191 million compared with $155 in the year-ago quarter. Free cash flow in the quarter was $168 million compared with $119 million generated in the comparable quarter a year ago.

Share repurchases in the first nine months amounted to $637 million.

Outlook

Berry Global is focused on creating organic growth opportunities and improving the balance sheet. Demand across businesses like foodservice, dispensing solutions, health, personal care and pharmaceutical is expected to be strong in the quarters ahead. Foreign currency woes, supply-chain issues and cost inflation are predicted to persist in fiscal 2022. However, moderation in cost inflation and improvements in the supply chain are predicted.

For fiscal 2022, adjusted earnings per share are predicted to be $7.40 compared with $7.20-$7.70 anticipated earlier.

Free cash flow will likely be $900-$1,000 million for fiscal 2022. Cash flow from operations is expected to be $1.5 billion, while capital expenditure is estimated at $750 million.

For the fiscal fourth quarter, management expects organic sales growth in low-single-digit from the same-period level last year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates review.

VGM Scores

At this time, Berry Global has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Berry Global has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Berry Global belongs to the Zacks Containers - Paper and Packaging industry. Another stock from the same industry, Sonoco (SON Quick QuoteSON - Free Report) , has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.

Sonoco reported revenues of $1.91 billion in the last reported quarter, representing a year-over-year change of +38.4%. EPS of $1.76 for the same period compares with $0.84 a year ago.

For the current quarter, Sonoco is expected to post earnings of $1.43 per share, indicating a change of +57.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Sonoco. Also, the stock has a VGM Score of C.