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5 Reasons to Add Grief (GEF) Stock to Your Portfolio Now
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Greif, Inc. (GEF - Free Report) , a manufacturer of industrial packaging products, bulk containers, and containerboard as well as corrugated products has been performing well off late. Shares of this Zacks Rank #1 (Strong Buy) stock have gained 55% year to date.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock as Greif looks promising and is poised to carry the momentum ahead. Additionally, the stock carries a long-term earnings growth rate of 8.67% and a VGM Score of “B.”
Strong Third Quarter
Greif performed impressively in the fiscal third quarter 2016, delivering an improvement in its bottom line despite a decline in its top line. Adjusted earnings came in at 91 cents, a 52% climb year over year, also surpassing the Zacks Consensus Estimate of 72 cents. Revenues on the other hand slumped 9% year over year to $845 million due to weakness in agricultural markets in Europe and North America.
Upbeat Guidance
Greif raised its earnings per share guidance for fiscal 2016 to the range of $2.36−$2.56, from the prior band of $2.20−$2.46. The company expects results to benefit from continuous focus on customer service excellence and fundamental operational improvements despite a sustained sluggish global industrial economy, weaker containerboard prices and weaker-than-expected seasonal agricultural sales.
We note that earnings estimates for Greif have displayed a healthy uptrend. For 2016, all the five estimates went up over the last 60 days with the Zacks Consensus Estimate rising approximately 7% to $2.46. The Zacks Consensus Estimate for 2017 has also jumped 11% over the same timeframe to $2.86 per share. The company has an expected growth rate of 12.66% for earnings for fiscal 2016 and 16.45% for the next fiscal.
It is also worth noting that the company has delivered an average positive earnings surprise of 21.29% in the last four quarters.
Growth Efforts in Place
We are encouraged by the company’s financial discipline and solid volume growth that will help it achieve the high end of its free cash flow range of $160-$190 million. It will also gain from sale of non-core assets, consolidation of facilities and cost reduction activities. Greif has been successful in fixing under-performing businesses and divested non-core assets and closed facilities which will drive long-term performance. Further, share repurchases will be accretive to earnings.
Attractive Valuation
Also, on a price-to-book basis, shares are trading at 2.3x, a discount to the industry average of 6.3x. Moreover, on a price-to-sales basis, shares are trading at 0.7x, a significant discount to the industry average of 1.3x.
In view of the above positives, we believe that Greif represents an attractive investment opportunity at current levels.
Berry Plastics Group, Inc. (BERY - Free Report) and Packaging Corporation of America (PKG - Free Report) also sport a Zacks Rank #1. While Berry Plastics generated a positive average earnings surprise of 13.97% over the trailing four quarters, Packaging Corporation reported a positive average earnings surprise of 4.59% in the trailing four quarters.
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5 Reasons to Add Grief (GEF) Stock to Your Portfolio Now
Greif, Inc. (GEF - Free Report) , a manufacturer of industrial packaging products, bulk containers, and containerboard as well as corrugated products has been performing well off late. Shares of this Zacks Rank #1 (Strong Buy) stock have gained 55% year to date.
If you haven’t taken advantage of the share price appreciation yet, the time is right for you to add the stock as Greif looks promising and is poised to carry the momentum ahead. Additionally, the stock carries a long-term earnings growth rate of 8.67% and a VGM Score of “B.”
Strong Third Quarter
Greif performed impressively in the fiscal third quarter 2016, delivering an improvement in its bottom line despite a decline in its top line. Adjusted earnings came in at 91 cents, a 52% climb year over year, also surpassing the Zacks Consensus Estimate of 72 cents. Revenues on the other hand slumped 9% year over year to $845 million due to weakness in agricultural markets in Europe and North America.
Upbeat Guidance
Greif raised its earnings per share guidance for fiscal 2016 to the range of $2.36−$2.56, from the prior band of $2.20−$2.46. The company expects results to benefit from continuous focus on customer service excellence and fundamental operational improvements despite a sustained sluggish global industrial economy, weaker containerboard prices and weaker-than-expected seasonal agricultural sales.
GREIF INC Price and Consensus
GREIF INC Price and Consensus | GREIF INC Quote
Estimates on the Upswing
We note that earnings estimates for Greif have displayed a healthy uptrend. For 2016, all the five estimates went up over the last 60 days with the Zacks Consensus Estimate rising approximately 7% to $2.46. The Zacks Consensus Estimate for 2017 has also jumped 11% over the same timeframe to $2.86 per share. The company has an expected growth rate of 12.66% for earnings for fiscal 2016 and 16.45% for the next fiscal.
It is also worth noting that the company has delivered an average positive earnings surprise of 21.29% in the last four quarters.
Growth Efforts in Place
We are encouraged by the company’s financial discipline and solid volume growth that will help it achieve the high end of its free cash flow range of $160-$190 million. It will also gain from sale of non-core assets, consolidation of facilities and cost reduction activities. Greif has been successful in fixing under-performing businesses and divested non-core assets and closed facilities which will drive long-term performance. Further, share repurchases will be accretive to earnings.
Attractive Valuation
Also, on a price-to-book basis, shares are trading at 2.3x, a discount to the industry average of 6.3x. Moreover, on a price-to-sales basis, shares are trading at 0.7x, a significant discount to the industry average of 1.3x.
In view of the above positives, we believe that Greif represents an attractive investment opportunity at current levels.
Stocks to Consider
Nordson Corporation (NDSN - Free Report) has a positive average earnings surprise of 9.13% over the last four quarters and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Berry Plastics Group, Inc. (BERY - Free Report) and Packaging Corporation of America (PKG - Free Report) also sport a Zacks Rank #1. While Berry Plastics generated a positive average earnings surprise of 13.97% over the trailing four quarters, Packaging Corporation reported a positive average earnings surprise of 4.59% in the trailing four quarters.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>