Sealed Air Corporation (SEE Quick QuoteSEE - Free Report) is scheduled to report third-quarter 2018 results on Nov 1, before the opening bell. In the last reported quarter, Sealed Air’s both earnings and total revenues improved 88% and 8% on a year-over-year basis, respectively.  

 

In the last reported quarter, Sealed Air’s adjusted earnings per share beat the Zacks Consensus Estimate by 10.34%. Notably, the company delivered an average positive earnings surprise of 3.52% over the trailing four quarters.

 

 

 

 

We believe Sealed Air’s top-line in the to-be-reported quarter will be supported by enhanced demand for its core product portfolio, recently-introduced innovations, e-commerce sector and strong fresh food markets. Ongoing momentum in high-growth geographies such as Brazil, Russia, China and Southeast Asia will continue in the to-be-reported quarter backed by higher demand for packaged proteins and convenience meals.  Further, the ongoing shift to fresh foods in North America and EMEA, combined with Sealed Air’s sustainable innovative packaging, is driving above market growth.

 

The Zacks Consensus Estimate for revenues for the third-quarter 2018 is pegged at $1,184 million, representing a year-over-year improvement of 5%.  Coming to the segments, the Zacks Consensus Estimate for net sales of Sealed Air’s Food Care segment is pegged at $726 million for the third-quarter 2018, representing year-over-year increase of 1%. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $142 million, indicating a year-over-year dip of 10%.

 

The Zacks Consensus Estimate for Product Care segment’s net sales is pegged at $484 million for the Sep-end quarter, representing year-over-year increase of 17%. The Zacks Consensus Estimate for the segment’s EBITDA is $91 million, an expected 5% increase from $87 million reported in the prior-year quarter.

 

Sealed Air’s third-quarter earnings are expected to reflect benefits from the company’s focus on reducing cost structure, driving operational excellence and commercializing new innovations. It will be further aided by benefits from prior acquisitions and favorable global business trends. However, currency headwinds, input cost inflation and increased investment in R&D, sales and marketing will somewhat dampen margins. Nevertheless, the Zacks Consensus Estimate for earnings per share of 60 cents for the to-be-reported quarter reflects year-over-year increase of 30%.

 

 

Over the past year, shares of Sealed Air have plunged 28.9% compared with the industry’s decline of 15%.

 

 

Our proven model does not conclusively show that Sealed Air is likely to beat earnings this quarter as it does not possess the key components. 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. This is not the case here as you will see below:

 

Zacks ESP: The Most Accurate estimate and the Zacks Consensus Estimate are both pegged at 60 cents, resulting in an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Zacks Rank: Sealed Air has a Zacks Rank #4 (Sell), which when combined with a 0.00% Earnings ESP makes a beat unlikely this quarter.

 

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

 

 

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

 

Tetra Tech, Inc. (TTEK Quick QuoteTTEK - Free Report) has an Earnings ESP of +0.96% and a Zacks Rank #1. Its shares have gained 35% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

CF Industries Holdings, Inc. (CF Quick QuoteCF - Free Report) has an Earnings ESP of +36.36% and a Zacks Rank #1. The company’s shares have been up 19% during the past year.

 

Axon Enterprise, Inc has an Earnings ESP of +33.33% and a Zacks Rank #3. The stock has appreciated 149% in a year’s time.

 

 

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