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Greif (GEF) Q3 Earnings & Sales Top Estimates, Hikes '21 View

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Greif, Inc. (GEF - Free Report) reported third-quarter fiscal 2021 (ended Jul 31, 2021) adjusted earnings per share of $1.93, which surpassed the Zacks Consensus Estimate of $1.60. The bottom line improved 127% year on year. Strong end-market demand drove the company’s bottom-line results despite material cost inflation and labor shortages.

Including one-time items, earnings per share was $1.89 in the quarter compared with 35 cents in the prior-year quarter.

Operational Update

Sales surged 38% year over year to $1,491 million. The top line beat the Zacks Consensus Estimate of $1,432 million.

Cost of sales was up 36% year over year to $1,172 million. Gross profit amounted to $319 million, reflecting growth of 45.1% from the prior-year quarter. Gross margin came in at 21.3% compared with the year-ago quarter’s 20.2%.

Selling, general and administrative (SG&A) expenses were up 18.4% year over year to $143 million. Operating profit soared 179.6% year over year to $173 million. Operating margin was 11.6% in the reported quarter compared with 5.7% in the year-earlier period. Adjusted EBITDA increased 49.2% year over year to $237.8 million in the fiscal third 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 47% year over year to $908 million. The segment’s adjusted EBITDA amounted to $146.2 million compared with the year-ago quarter’s $84.5 million.

The Paper Packaging segment sales rose 26% year over year to $579 million in the fiscal third quarter. The segment’s adjusted EBITDA moved up to $89.9 million from the prior-year quarter’s $72 million.

The Land Management segment’s sales totaled $4.2 million in the reported quarter compared with $5.9 million in the year-ago quarter. Adjusted EBITDA was $1.7 million, down from the year-earlier quarter’s $2.9 million.

Financials

Greif reported cash and cash equivalents of $99.8 million as of the fiscal third-quarter 2021-end, compared with $105.9 million as of the end of fiscal 2020. Cash flow from operating activities totaled $95 million in the quarter under review compared with $135 million in the prior-year quarter.

Long-term debt amounted to $2,089.7 million as of Jun 31, 2021 compared with $2,335.5 million as of Oct 31, 2020.

On Aug 31, Greif’s board announced a quarterly cash dividend of 46 cents per share of Class A Common Stock and 69 cents per share of Class B Common Stock. The dividend payout will be made on Oct 1, to shareholders of record at the close of business on Sep 17, 2021.

Outlook

Given strong end-market demand, Greif now expects fiscal 2021 adjusted earnings per share between $5.10 and $5.30, up from prior guidance of $4.55 and $4.85. Adjusted free cash flow is anticipated between $335 million and $365 million, up from previous guidance of $285-$325 million.

Price Performance

So far this year, Greif’s shares have appreciated 37.9%, outperforming the industry’s growth of 15.1%.

Zacks Investment Research
Image 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 include Encore Wire Corporation (WIRE - Free Report) , Terex Corporation (TEX - Free Report) and Lincoln Electric Holdings, Inc. (LECO - Free Report) While Encore Wire and Terex sport a Zacks Rank #1 (Strong Buy), Lincoln Electric carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.

Terex has an estimated earnings growth rate of 2,207.6% for 2021. The company’s shares have gained 47.4% so far this year.

Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.