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Crown Holdings (CCK) Down 8.5% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Crown Holdings, Inc. (CCK - Free Report) . Shares have lost about 8.5% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is CCK 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.
Crown Holdings' Q2 Earnings Miss Estimates, View Cut
Crown Holdings delivered second-quarter 2018 adjusted earnings per share of $1.55, which increased 32.5% year over year. However, it missed the Zacks Consensus Estimate of $1.58. Earnings came in at the lower end of management’s guided range of $1.55-$1.65.
On a reported basis, the company reported earnings of 99 cents per share compared to 94 cents in the prior-year quarter.
Net sales in the quarter rose 41% year over year to $3,046 million. The revenue figure also surpassed the Zacks Consensus Estimate of $2,965 million. The year-over-year improvement in sales was driven by positive impact of the Signode acquisition, improved beverage can volumes, pass through of higher material costs to customers and favorable currency-translation impact.
Cost and Margins
Cost of products sold increased 42% year over year to $2,466 million. On a year-over-year basis, gross profit improved 35% to $580 million, while gross margin contracted 90 basis points (bps) to 19% in the quarter.
Selling and administrative expenses increased 75% year over year to $159 million. Adjusted segment operating income increased 30% year over year to $207 million in the reported quarter. Operating margin shrunk 60 bps to 6.8% from 7.4% recorded in the year-ago quarter.
Segment Performance
From the second quarter Crown Holdings will report transit packaging as a new segment. Thus, the company will report its performance in five operating segments from now.
Net sales from the Americas Beverage segment were $848 million, up 16% from $729 million reported in the year-ago quarter. Segment operating profit climbed 3.7% to $113 million from $109 million in the year-earlier quarter.
The European Beverage segment’s sales inched up 0.7% year over year to $405 million. Operating income rose 17% year over year to $59 million.
Revenues in the European Food segment were up 12% year over year to $514 million. Segment operating profit went up 19.7% to $85 million from $71 million reported in the year-ago quarter.
Revenues in the Asia-Pacific segment improved 15.7% year over year to $332 million. Operating profit went up to $47 million from $45 million reported in the prior-year quarter.
Revenues in the Transit Packaging segment were $620 million. Operating profit was $94 million in the reported quarter.
Financial Update
Crown Holdings had cash and cash equivalents of $298 million at the end of the second quarter compared with $301 million at the end of the prior-year quarter. The company reported cash used in operating activities of $492 million for the six-month period ended Jun 30, 2018, compared with $475 million recorded in the prior-year period.
Adjusted free cash flow was $330 million in the second quarter compared with $259 million in the prior-year quarter. As of the quarter end, Crown Holdings’ total debt increased to $1,706 million compared with $1,372 million as of the year-ago quarter end.
On Apr 3, Crown Holdings concluded the acquisition of the Transit Packaging business. Transit Packaging made a significant contribution during the second quarter, with continued growth across its leading equipment and tools businesses, and is well poised to continue to grow in the future.
Outlook
Crown Holdings trimmed its adjusted earnings per share guidance of $5.15-$5.30 from $5.35-$5.55, for full-year 2018 due to persistent elevated freight costs in North America and foreign currency-translation impact from the strength of the U.S. dollar. It also projects third-quarter 2018 earnings per share of $1.60-$1.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 5.4% due to these changes.
At this time, CCK has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was also 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise CCK has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Crown Holdings (CCK) Down 8.5% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Crown Holdings, Inc. (CCK - Free Report) . Shares have lost about 8.5% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is CCK 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.
Crown Holdings' Q2 Earnings Miss Estimates, View Cut
Crown Holdings delivered second-quarter 2018 adjusted earnings per share of $1.55, which increased 32.5% year over year. However, it missed the Zacks Consensus Estimate of $1.58. Earnings came in at the lower end of management’s guided range of $1.55-$1.65.
On a reported basis, the company reported earnings of 99 cents per share compared to 94 cents in the prior-year quarter.
Net sales in the quarter rose 41% year over year to $3,046 million. The revenue figure also surpassed the Zacks Consensus Estimate of $2,965 million. The year-over-year improvement in sales was driven by positive impact of the Signode acquisition, improved beverage can volumes, pass through of higher material costs to customers and favorable currency-translation impact.
Cost and Margins
Cost of products sold increased 42% year over year to $2,466 million. On a year-over-year basis, gross profit improved 35% to $580 million, while gross margin contracted 90 basis points (bps) to 19% in the quarter.
Selling and administrative expenses increased 75% year over year to $159 million. Adjusted segment operating income increased 30% year over year to $207 million in the reported quarter. Operating margin shrunk 60 bps to 6.8% from 7.4% recorded in the year-ago quarter.
Segment Performance
From the second quarter Crown Holdings will report transit packaging as a new segment. Thus, the company will report its performance in five operating segments from now.
Net sales from the Americas Beverage segment were $848 million, up 16% from $729 million reported in the year-ago quarter. Segment operating profit climbed 3.7% to $113 million from $109 million in the year-earlier quarter.
The European Beverage segment’s sales inched up 0.7% year over year to $405 million. Operating income rose 17% year over year to $59 million.
Revenues in the European Food segment were up 12% year over year to $514 million. Segment operating profit went up 19.7% to $85 million from $71 million reported in the year-ago quarter.
Revenues in the Asia-Pacific segment improved 15.7% year over year to $332 million. Operating profit went up to $47 million from $45 million reported in the prior-year quarter.
Revenues in the Transit Packaging segment were $620 million. Operating profit was $94 million in the reported quarter.
Financial Update
Crown Holdings had cash and cash equivalents of $298 million at the end of the second quarter compared with $301 million at the end of the prior-year quarter. The company reported cash used in operating activities of $492 million for the six-month period ended Jun 30, 2018, compared with $475 million recorded in the prior-year period.
Adjusted free cash flow was $330 million in the second quarter compared with $259 million in the prior-year quarter. As of the quarter end, Crown Holdings’ total debt increased to $1,706 million compared with $1,372 million as of the year-ago quarter end.
On Apr 3, Crown Holdings concluded the acquisition of the Transit Packaging business. Transit Packaging made a significant contribution during the second quarter, with continued growth across its leading equipment and tools businesses, and is well poised to continue to grow in the future.
Outlook
Crown Holdings trimmed its adjusted earnings per share guidance of $5.15-$5.30 from $5.35-$5.55, for full-year 2018 due to persistent elevated freight costs in North America and foreign currency-translation impact from the strength of the U.S. dollar. It also projects third-quarter 2018 earnings per share of $1.60-$1.70.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been five revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 5.4% due to these changes.
Crown Holdings, Inc. Price and Consensus
Crown Holdings, Inc. Price and Consensus | Crown Holdings, Inc. Quote
VGM Scores
At this time, CCK has a great Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was also 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise CCK has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.