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Why Is Amcor (AMCR) Down 8.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Amcor (AMCR - Free Report) . Shares have lost about 8.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Amcor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Amcor's Q1 Earnings Match Estimates, Revenues Beat

Amcor reported first-quarter fiscal 2022 adjusted earnings per share of 18 cents, which came in line with the Zacks Consensus Estimate. The bottom line improved 13% year over year from 16 cents reported in the prior-year quarter.

Including special items, the company reported net earnings per share of 13 cents, up 4% from the prior-year quarter.

Total revenues improved 10% year over year to $3,420 million in the reported quarter and beat the Zacks Consensus Estimate of $3,276 million. Price increase contributed 9% to the improvement, while volumes were in line with the prior-year quarter.

Cost and Margins

Cost of sales increased 13% year over year to $2,770 million. Gross profit dipped 1% year over year to $650 million. Gross margin was 19%, reflecting a contraction of 210 basis points from the prior-year quarter.

SG&A expenses decreased 5% to $313 million year over year. Adjusted operating income was $381 million in the quarter, up 7% from the $358 million in the prior-year quarter. Adjusted operating margin was 11.1% compared with 11.6% in the prior-year quarter. Adjusted EBITDA in the quarter was $486 million compared with $460 million in the prior-year quarter.

Segment Performance

Flexibles: Net sales increased 10% year over year to $2,634 million. Adjusted operating income climbed 9% year over year to $339 million.

Rigid Packaging: The segment reported net sales of $786 million in the reported quarter, up 13% from the prior-year quarter. Adjusted operating income was down 14% year over year to $62 million.

Financial Updates

As of Sep 30, 2021, Amcor had $633 million of cash and cash equivalents compared with $757 million as of Sep 30, 2020. The company utilized $112 million of cash in operating activities in first-quarter fiscal 2022 compared with an outflow of $110 million in the prior-year quarter. Adjusted free cash flow was an outflow of $242 million in the reported quarter compared with usage of $190 million in the prior-year quarter. As of Sep 30, 2021, Amcor’s net debt totaled $5.95 billion, up from $5.4 billion as of Jun 30, 2021.

The company hiked quarterly dividend by 2% to 12 cents per share. Amcor repurchased 5.2 million shares for $64 million in the quarter. It plans to spend $400 million for share repurchases in fiscal 2022.

Fiscal 2022 Guidance Affirmed

Amcor expects adjusted constant currency earnings per share growth of approximately 7-11% in fiscal 2022 or approximately in the range of 79 cents to 81 cents. The company projects adjusted free cash flow between $1.1 billion and $1.2 billion in fiscal 2022.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -5.26% due to these changes.

VGM Scores

At this time, Amcor has a subpar Growth Score of D, a grade with the same score on the momentum front. 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, Amcor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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