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Why Is Silgan (SLGN) Down 1.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Silgan Holdings (SLGN - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Silgan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Silgan Q2 Earnings & Revenues Top Estimates, View Up
Silgan Holdings reported second-quarter 2020 adjusted earnings of 85 cents per share, handily beating the Zacks Consensus Estimate of 63 cents. Further, the figure jumped 54.5% year over year. Solid demand growth across its food, health and hygiene products contributed to the quarterly results.
Including one-time items, the company’s earnings per share came in at 70 cents compared with the prior-year quarter’s 28 cents.
Total revenues increased 7.6% year over year to $1,176.5 million on higher sales across its business segments. The top-line figure also surpassed the Zacks Consensus Estimate of $1,116 million.
Cost and Margins
During the June-end quarter, cost of goods sold climbed 4.6% to $952.4 million from the prior year’s $909.7 million. Gross profit improved 21.7% year over year to $224.1 million. Gross margin came in at 19% compared with the year-ago quarter’s 17%.
Selling, general and administrative expenses went up 25.6% year over year to $100.6 million during the second quarter. Adjusted operating income was up 12% year over year to $120.6 million. Operating margin was 10.3% in the reported quarter compared with the 9.8% witnessed in the prior-year period.
Segment Performance
Revenues in the Metal Containers segment was up 3.8% year over year to $597.2 million. The segment’s adjusted operating income increased 37.8% year over year to $73 million.
The Closures segment’s revenues jumped 13% year over year to $410.5 million. Adjusted operating income for the segment came in at $62.8 million compared with the year-earlier quarter’s $47.1 million.
In the Plastic Containers segment, revenues improved to $168.8 million from the $154.2 million reported in the prior-year quarter. The segment recorded an adjusted operating profit of $23.1 million, up from the year-ago quarter’s $13.5 million.
Financial Updates
The company had cash and cash equivalents of $191.1 million in the June-end quarter, up from the year-ago quarter’s $111.3 million. Cash utilized in operating activities were $63.7 million in the first half of 2020 compared with the $129.1 million recorded in the first half of 2019.
Outlook
Silgan has raised its adjusted earnings per share (EPS) guidance for the ongoing year on the current demand for its products and strong year-to-date performance. The company now expects adjusted EPS between $2.70 and $2.85 compared with the prior range of $2.30 to $2.50. The mid-point of the guidance indicates 28% year-over-year increase from $2.16 in 2019. The guidance factors in strong demand for food and consumer health and hygiene products as well as acquisition of Albea’s dispensing business. However, this will be somewhat negated by prevalent bleak demand for beauty products and others that are used in public venues.
Silgan has also raised the current-year free cash flow estimate to roughly $330 million from $275 million.
For the third quarter, Silgan now expects adjusted earnings per share in the range of 85 cents to $1.00 compared with the 76 cents recorded in third-quarter 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 14.17% due to these changes.
VGM Scores
Currently, Silgan has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. It comes with little surprise Silgan has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Silgan (SLGN) Down 1.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Silgan Holdings (SLGN - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Silgan due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Silgan Q2 Earnings & Revenues Top Estimates, View Up
Silgan Holdings reported second-quarter 2020 adjusted earnings of 85 cents per share, handily beating the Zacks Consensus Estimate of 63 cents. Further, the figure jumped 54.5% year over year. Solid demand growth across its food, health and hygiene products contributed to the quarterly results.
Including one-time items, the company’s earnings per share came in at 70 cents compared with the prior-year quarter’s 28 cents.
Total revenues increased 7.6% year over year to $1,176.5 million on higher sales across its business segments. The top-line figure also surpassed the Zacks Consensus Estimate of $1,116 million.
Cost and Margins
During the June-end quarter, cost of goods sold climbed 4.6% to $952.4 million from the prior year’s $909.7 million. Gross profit improved 21.7% year over year to $224.1 million. Gross margin came in at 19% compared with the year-ago quarter’s 17%.
Selling, general and administrative expenses went up 25.6% year over year to $100.6 million during the second quarter. Adjusted operating income was up 12% year over year to $120.6 million. Operating margin was 10.3% in the reported quarter compared with the 9.8% witnessed in the prior-year period.
Segment Performance
Revenues in the Metal Containers segment was up 3.8% year over year to $597.2 million. The segment’s adjusted operating income increased 37.8% year over year to $73 million.
The Closures segment’s revenues jumped 13% year over year to $410.5 million. Adjusted operating income for the segment came in at $62.8 million compared with the year-earlier quarter’s $47.1 million.
In the Plastic Containers segment, revenues improved to $168.8 million from the $154.2 million reported in the prior-year quarter. The segment recorded an adjusted operating profit of $23.1 million, up from the year-ago quarter’s $13.5 million.
Financial Updates
The company had cash and cash equivalents of $191.1 million in the June-end quarter, up from the year-ago quarter’s $111.3 million. Cash utilized in operating activities were $63.7 million in the first half of 2020 compared with the $129.1 million recorded in the first half of 2019.
Outlook
Silgan has raised its adjusted earnings per share (EPS) guidance for the ongoing year on the current demand for its products and strong year-to-date performance. The company now expects adjusted EPS between $2.70 and $2.85 compared with the prior range of $2.30 to $2.50. The mid-point of the guidance indicates 28% year-over-year increase from $2.16 in 2019. The guidance factors in strong demand for food and consumer health and hygiene products as well as acquisition of Albea’s dispensing business. However, this will be somewhat negated by prevalent bleak demand for beauty products and others that are used in public venues.
Silgan has also raised the current-year free cash flow estimate to roughly $330 million from $275 million.
For the third quarter, Silgan now expects adjusted earnings per share in the range of 85 cents to $1.00 compared with the 76 cents recorded in third-quarter 2019.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 14.17% due to these changes.
VGM Scores
Currently, Silgan has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. It comes with little surprise Silgan has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.