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What's in Store for WestRock (WRK) this Earnings Season?
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WestRock Company (WRK - Free Report) , a provider of paper and packaging solutions, is set to report first-quarter fiscal 2017 results on Jan 26. Last quarter, the company posted a positive surprise of 14.52%. In fact, it delivered earnings surprises in each of the last four quarters, with an average beat of 9.73%.
Let’s see how things are shaping up for this announcement.
In the fiscal first quarter, WestRock expects earnings to decrease sequentially, in line with the seasonal pattern experienced last year. Price and mix will likely be negative as the impact of the previously announced corrugated price increase will be countered by the flow-through of the earlier published consumer price decreases.
Further, the fiscal first quarter is typically the heaviest maintenance period for the company. In fact, the company is planning 160,000 tons of downtime. Volumes will likely decline due to four less shipping days in the container business. Additionally, consumer grades are prone to seasonal weakness in the fiscal first quarter. Inflation of input prices and Hurricane Matthew are also likely to have a negative impact of approximately $15–$20 million.
Moreover, price/mix pressure continues to be a headwind for WestRock due to the oversupply of both containerboard and boxboard.
Share Price Performance
In the last one year, shares of WestRock have outperformed the Zacks classified Paper & Paper Products sub-industry. The stock gained 62.6% compared with the 45.9% increase registered by the industry over the same time frame.
Earnings Whispers
Our proven model does not conclusively show that WestRock will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Most Accurate estimate is pegged at 42 cents while the Zacks Consensus Estimate stands at 45 cents. Hence, the difference is -6.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: WestRock’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +2.67% and a Zacks Rank #2.
Avino Silver & Gold Mines Ltd. (ASM - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #2.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
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What's in Store for WestRock (WRK) this Earnings Season?
WestRock Company (WRK - Free Report) , a provider of paper and packaging solutions, is set to report first-quarter fiscal 2017 results on Jan 26. Last quarter, the company posted a positive surprise of 14.52%. In fact, it delivered earnings surprises in each of the last four quarters, with an average beat of 9.73%.
Let’s see how things are shaping up for this announcement.
WestRock Co. Price and Consensus
WestRock Co. Price and Consensus | WestRock Co. Quote
Factors at Play
In the fiscal first quarter, WestRock expects earnings to decrease sequentially, in line with the seasonal pattern experienced last year. Price and mix will likely be negative as the impact of the previously announced corrugated price increase will be countered by the flow-through of the earlier published consumer price decreases.
Further, the fiscal first quarter is typically the heaviest maintenance period for the company. In fact, the company is planning 160,000 tons of downtime. Volumes will likely decline due to four less shipping days in the container business. Additionally, consumer grades are prone to seasonal weakness in the fiscal first quarter. Inflation of input prices and Hurricane Matthew are also likely to have a negative impact of approximately $15–$20 million.
Moreover, price/mix pressure continues to be a headwind for WestRock due to the oversupply of both containerboard and boxboard.
Share Price Performance
In the last one year, shares of WestRock have outperformed the Zacks classified Paper & Paper Products sub-industry. The stock gained 62.6% compared with the 45.9% increase registered by the industry over the same time frame.
Earnings Whispers
Our proven model does not conclusively show that WestRock will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: The Most Accurate estimate is pegged at 42 cents while the Zacks Consensus Estimate stands at 45 cents. Hence, the difference is -6.67%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: WestRock’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:
Methanex Corporation (MEOH - Free Report) has an Earnings ESP of +53.33% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle Corporation (ALB - Free Report) has an Earnings ESP of +2.67% and a Zacks Rank #2.
Avino Silver & Gold Mines Ltd. (ASM - Free Report) has an Earnings ESP of +25.00% and a Zacks Rank #2.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>