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Greif (GEF) Earnings and Revenues Beat Estimates in Q2, Up Y/Y

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Greif, Inc. (GEF - Free Report) reported second-quarter fiscal 2021 (ended Apr 30, 2021) adjusted earnings per share of $1.13, which surpassed the Zacks Consensus Estimate of $1.11. It also exceeded the company’s guidance of 96 cents to $1.06. Further, the bottom line improved 18.9% year on year. Strong business performance and solid customer demand drove the company’s bottom-line results.

Including one-time items, earnings per share was $2.51 in the quarter compared with 19 cents in the prior-year quarter.

Operational Update

Sales were up 15.8% year over year to $1,341 million. The top line beat the Zacks Consensus Estimate of $1,210 million.

Cost of sales was up 17.1% year over year to $1,075 million. Gross profit amounted to $266 million, reflecting growth of 10.4% from the prior-year quarter. Gross margin came in at 19.8% compared with the year-ago quarter’s 20.8%.

Selling, general and administrative (SG&A) expenses was up 21.5% year over year to $147 million. Operating profit soared 179.2% year over year to $201 million. Operating margin was 15% in the reported quarter compared with 6.2% in the year-earlier period. Adjusted EBITDA declined 2.2% year over year to $177 million in the fiscal second quarter.

Greif, Inc. Price, Consensus and EPS Surprise

Greif, Inc. Price, Consensus and EPS Surprise

Greif, Inc. price-consensus-eps-surprise-chart | Greif, Inc. Quote

Segmental Performance

Sales in the Global Industrial Packaging segment increased 19.1% year over year to $798 million. The segment’s adjusted EBITDA amounted to $106.2 million compared with the year-ago quarter’s $99.1 million

The Paper Packaging segment sales rose 11.4%, year over year to $537 million in the fiscal second quarter. The segment’s adjusted EBITDA slumped to $68.3 million from prior-year quarter’s $79.1 million.

The Land Management segment’s sales totaled $5.6 million in the reported quarter compared with $6.7 million in the year-ago quarter. Adjusted EBITDA was $2.1 million, down from year earlier quarter’s $3.1 million.

Financials

Greif reported cash and cash equivalents of $110.4 million as of fiscal second quarter 2021-end, compared with $105.9 million as of end of fiscal 2020. Cash flow from operating activities totalled $152.3 million in the quarter under review compared with $99.8 million in the prior-year quarter.

Long-term debt amounted to $2,155 million as of Apr 30, 2021 compared with $2,336 million as of Oct 31, 2020.

On Jun 8, Greif’s board announced a quarterly cash dividend of 44 cents per share of Class A Common Stock and 66 cents per share of Class B Common Stock. The dividend payout will be made on Jul 1, to shareholders of record at the close of business on Jun 21, 2021.

Outlook

Given improved customers’ demand patterns, Greif expects fiscal 2021 adjusted earnings per share between $4.55 and $4.85. Adjusted free cash flow is anticipated in between $285 million and $325 million.

Price Performance

Over the past year, Greif’s shares have appreciated 86.6%, compared with the industry’s growth of 51%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Key Picks

Greif currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the industrial products sector are Tennant Company (TNC - Free Report) Encore Wire Corporation (WIRE - Free Report) and Arconic Corporation (ARNC - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tennant has an expected earnings growth rate of 49.5% for the current fiscal year. The company’s shares have gained around 18% year to date.

Encore Wire has an estimated earnings growth rate of 49.5% for the current fiscal year. Year to date, the company’s shares have rallied nearly 36%.

Arconic has a projected earnings growth rate of 447% for the current fiscal year. The stock has appreciated around 21% so far this year.

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