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Berry Global (BERY) to Post Q4 Earnings: Will it Disappoint?

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Berry Global Group, Inc. (BERY - Free Report) is slated to report fourth-quarter fiscal 2020 (ended September 2020) results on Nov 19, before market open.

The company delivered better-than-expected results in each of the last four quarters. It delivered a trailing four quarters positive earnings surprise of 16.34%, on average. Notably, its fiscal third-quarter adjusted earnings of $1.52 per share surpassed the Zacks Consensus Estimate of $1.18 by 28.81%.

In the past three months, shares of Berry Global have lost 0.1% against the industry’s growth of 10.5%.

Factors at Play

Persistent softness across Berry Global’s Engineered Materials segment, owing to the low demand environment is likely to have hurt its top-line performance in the fiscal fourth quarter. Also, weakness across the company’s automotive and industrial end markets might have affected its Consumer Packaging – International segment. Notably, for the fiscal fourth quarter, it expects sales volume for the Engineered Materials segment to decline in mid-single digits on a year-over-year basis, while that of the Consumer Packaging – International segment is projected to fall in low-single digits.

Despite cost-reduction initiatives, Berry Global has been witnessing rising costs and expenses over the past few quarters. This trend most likely continued in the fiscal fourth quarter, owing to its continued focus on growth-related projects, investments and restructuring activities. For fiscal 2020, the company expects to incur restructuring-related and other costs of $50 million. Higher costs and expenses might have weighed on its profitability and margins in the quarter under review.  

However, Berry Global is likely to have benefited from persistent strength across the healthcare, hygiene and grocery end markets as well as recovery in the food service space. Also, strength across the RPC Group business (acquired in July 2019) is likely to have boosted its top-line performance in the to-be-reported quarter. Notably, the business has enhanced Berry Global's growth opportunities in the plastic and recycled packaging industry.

The Zacks Consensus Estimate for fiscal fourth-quarter revenues from the Engineered Materials and Consumer Packaging — North America segments is currently pegged at $570 million and $732 million, indicating decline of 9.2% and 1.6%, respectively, from the year-ago reported numbers. Also, the consensus estimate for Consumer Packaging – International segment’s revenues is pegged at $1,046 million, indicating a fall of 2.9% on a year-over-year basis. However, the consensus estimate for revenues from Health, Hygiene & Specialties segment stands at $594 million, suggesting year-over-year growth of 4.2%.

Earnings Whispers

According to our quantitative model, a stock needs to have the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) to increase the odds of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

But that is not the case here as we will see below.

Earnings ESP: Berry Global has an Earnings ESP of -0.91% as the Most Accurate Estimate is pegged at $1.23, lower than the Zacks Consensus Estimate of $1.24.

Berry Global Group, Inc. Price and EPS Surprise

Berry Global Group, Inc. Price and EPS Surprise

Berry Global Group, Inc. price-eps-surprise | Berry Global Group, Inc. Quote

Zacks Rank: The company carries a Zacks Rank #4 (Sell).

Key Picks

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

Pentair plc PNR has an Earnings ESP of +0.81% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HD Supply Holdings, Inc. has an Earnings ESP of +7.10% and a Zacks Rank #3.

Albany International Corporation AIN has an Earnings ESP of +3.40% and a Zacks Rank of 3, at present.

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