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Sealed Air (SEE) Up 6.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Sealed Air (SEE - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sealed Air due for a pullback? 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.
Sealed Air Q2 Earnings Miss Estimates, '21 View Up
Sealed Air reported second-quarter 2021 adjusted earnings per share of 79 cents, missing the Zacks Consensus Estimate of 80 cents. The bottom line, however, improved 4% year over year.
Including special items, the company delivered net earnings per share of 71 cents compared with the prior-year quarter figure of 64 cents.
Total revenues were up 15.4% year over year to $1,329 million in the reported quarter, highlighting healthy demand for automated and sustainable packaging solutions. Further, the top line beat the Zacks Consensus Estimate of $1,272 million.
Cost and Margins
Cost of sales climbed 21.8% year over year to $928 million. Gross profit increased 3% year over year to $401 million. Gross margin contracted to 30.1% from the prior-year quarter’s 33.8%.
SG&A expenses flared up 4% to $192 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $263 million in the quarter, up 1% from the prior-year period. Adjusted EBITDA margin was 19.7% compared with the prior-year quarter’s 22.5%. Benefits from higher sales and productivity were offset by supply-chain disruptions and inflationary pressure.
Segment Performance
Food: Net sales jumped 9% year over year to $737 million. The company witnessed strength in automation and year-over-year higher food service demand. Adjusted EBITDA was down 6.5% year over year to $158 million. Volume growth and productivity improvements were offset by negative price/cost related to higher input costs. The segment also incurred higher freight costs to meet increased customer demand, while managing global supply disruptions.
Protective: The segment reported net sales of $592 million during the quarter under review, up 24% from the prior-year period led by continued strength in e-Commerce and automation, coupled with year-over-year higher industrial demand. Adjusted EBITDA advanced 17% year over year to $107 million on sales growth, partially negated by negative price/cost.
Financial Updates
Cash flow from operating activities was $199.5 million in the six-month period ended on Jun 30, 2021 compared with the year-ago period’s $213 million. During the reported quarter, Sealed Air hiked quarterly cash dividend by 25% to 20 cents per share.
The company paid cash dividends of $56 million during the first six months of 2021 and repurchased $299 million shares. On Aug 2, Sealed Air’s board authorized a new share-repurchase program of $1 billion.
As of Jun 30, 2021, Sealed Air’s net debt was $3.5 billion, up from $3.2 billion as of Dec 31, 2020. As of the end of the quarter, the company had $1.4 billion of liquidity available, which comprised $273 million in cash and $1,144 million of undrawn, committed credit facilities.
2021 Guidance Updated
For 2021, Sealed Air expects net sales in the range of $5.4 billion to $5.5 billion, higher than the prior expectation of $5.25 billion to $5.35 billion. This indicates an increase of 10-12% as reported and 8-10% in constant dollars. The company expects adjusted EBITDA to lie between $1.12 billion and $1.15 billion for the current year. The adjusted earnings per share are now anticipated in the band of $3.45 to $3.60. The company had earlier provided a guidance range of $3.40-$3.55. Sealed Air projects free cash flow to be between $520 million and $570 million for the current year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -7.82% due to these changes.
VGM Scores
At this time, Sealed Air has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sealed Air has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Sealed Air (SEE) Up 6.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Sealed Air (SEE - Free Report) . Shares have added about 6.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sealed Air due for a pullback? 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.
Sealed Air Q2 Earnings Miss Estimates, '21 View Up
Sealed Air reported second-quarter 2021 adjusted earnings per share of 79 cents, missing the Zacks Consensus Estimate of 80 cents. The bottom line, however, improved 4% year over year.
Including special items, the company delivered net earnings per share of 71 cents compared with the prior-year quarter figure of 64 cents.
Total revenues were up 15.4% year over year to $1,329 million in the reported quarter, highlighting healthy demand for automated and sustainable packaging solutions. Further, the top line beat the Zacks Consensus Estimate of $1,272 million.
Cost and Margins
Cost of sales climbed 21.8% year over year to $928 million. Gross profit increased 3% year over year to $401 million. Gross margin contracted to 30.1% from the prior-year quarter’s 33.8%.
SG&A expenses flared up 4% to $192 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $263 million in the quarter, up 1% from the prior-year period. Adjusted EBITDA margin was 19.7% compared with the prior-year quarter’s 22.5%. Benefits from higher sales and productivity were offset by supply-chain disruptions and inflationary pressure.
Segment Performance
Food: Net sales jumped 9% year over year to $737 million. The company witnessed strength in automation and year-over-year higher food service demand. Adjusted EBITDA was down 6.5% year over year to $158 million. Volume growth and productivity improvements were offset by negative price/cost related to higher input costs. The segment also incurred higher freight costs to meet increased customer demand, while managing global supply disruptions.
Protective: The segment reported net sales of $592 million during the quarter under review, up 24% from the prior-year period led by continued strength in e-Commerce and automation, coupled with year-over-year higher industrial demand. Adjusted EBITDA advanced 17% year over year to $107 million on sales growth, partially negated by negative price/cost.
Financial Updates
Cash flow from operating activities was $199.5 million in the six-month period ended on Jun 30, 2021 compared with the year-ago period’s $213 million. During the reported quarter, Sealed Air hiked quarterly cash dividend by 25% to 20 cents per share.
The company paid cash dividends of $56 million during the first six months of 2021 and repurchased $299 million shares. On Aug 2, Sealed Air’s board authorized a new share-repurchase program of $1 billion.
As of Jun 30, 2021, Sealed Air’s net debt was $3.5 billion, up from $3.2 billion as of Dec 31, 2020. As of the end of the quarter, the company had $1.4 billion of liquidity available, which comprised $273 million in cash and $1,144 million of undrawn, committed credit facilities.
2021 Guidance Updated
For 2021, Sealed Air expects net sales in the range of $5.4 billion to $5.5 billion, higher than the prior expectation of $5.25 billion to $5.35 billion. This indicates an increase of 10-12% as reported and 8-10% in constant dollars.
The company expects adjusted EBITDA to lie between $1.12 billion and $1.15 billion for the current year. The adjusted earnings per share are now anticipated in the band of $3.45 to $3.60. The company had earlier provided a guidance range of $3.40-$3.55. Sealed Air projects free cash flow to be between $520 million and $570 million for the current year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -7.82% due to these changes.
VGM Scores
At this time, Sealed Air has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Sealed Air has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.