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Verso (VRS) to Report Q4 Earnings: What's in the Cards?

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Verso Corporation is likely to register a improvement in earnings when it reports its fourth-quarter 2021 results later this week.

The Zacks Consensus Estimate for the fiscal fourth-quarter revenues is pegged at $298.4 million, suggesting a decline of 5% from the year-ago period. The same for earnings per share stands at 67 cents, indicating a turnaround performance from a loss of $1.84 per share reported in the prior-year quarter. The Zacks Consensus Estimate for the company’s fourth-quarter earnings has been revised downward by 26% over the past 30 days.

Q3 Performance

Verso delivered year-over-year improvement in both adjusted earnings per share and revenues in the last reported quarter. VRS beat the Zacks Consensus Estimate on both the counts. The company has a trailing four-quarter earnings surprise of 666.6%, on average.

Verso Corporation Price and EPS Surprise Verso Corporation Price and EPS Surprise

Verso Corporation price-eps-surprise | Verso Corporation Quote

Key Factors to Note

Verso’s fourth-quarter top line is likely to reflect strong demand and impact of the price hikes implemented by the company. Strong demand with reduced industry capacity has been leading to healthy order rates across Verso’s product lines. However, volumes are likely to be lower year on year, due to the impact of the permanent shutdown of the Duluth Mill in December 2020 and idling of the Wisconsin Rapids mills in February 2021.

Over the past few years, Verso has been streamlining its operations and making targeted capital investments to reduce costs, expand product offerings, and maximize pulp production. The company’s fourth-quarter margins might have benefited from the conversion to its current two mill system, improved performance and cost reduction initiatives. Lower operating expenses due to closure or idling of mills is expected to have provided a boost to operating margins. Selling, general and administrative expenses is also expected to be lower in the quarter due to cost reduction initiatives in connection with the sale of the Androscoggin and Stevens Point mills in February 2020. However, inflationary cost increases due to purchased pulp, latex, energy and freight might have negated some of these gains.

A Key Development in Q4

On Dec 19, Verso announced that it has entered into a definitive merger agreement under which BillerudKorsnäs AB ("BillerudKorsnäs") will acquire all of its outstanding shares for a purchase price of $27 per share in cash, or approximately $825 million. The transaction is expected to close in the second quarter of 2022.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Verso this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat but that is not the case here.

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

Earnings ESP: The Earnings ESP for Verso is 0.00%.

Zacks Rank: Verso currently carries a Zacks Rank of 4 (Sell).

Share Price Performance

Zacks Investment Research
Image Source: Zacks Investment Research

Verso’s shares have gained 41.6% over the past year, against the industry’s decline of 7.2%.

Stocks Poised to Beat Estimates

Here are a few companies worth considering as our model shows that these have the right combination of elements to beat on earnings this season:

Vale S.A (VALE - Free Report) currently has an Earnings ESP of +11.77% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

VALE is scheduled to report fourth-quarter 2021 results on Feb 24. The Zacks Consensus Estimate for Vale’s quarterly revenues is pegged at $12.98 billion, indicating a 12% drop from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for Vale’s bottom line has moved up 15% in the past 30 days to 85 cents per share. The consensus estimate for earnings suggests a decline of 22% from the year-ago quarter’s reported figure. VALE has a trailing four-quarter earnings surprise of 11.96%, on average.

Newmont Mining (NEM - Free Report) currently has an Earnings ESP of +3.59% and a Zacks Rank #3. NEM is scheduled to report fourth-quarter fiscal 2021 numbers on Feb 24, before the market opens. The Zacks Consensus Estimate for the company’s quarterly revenues is pegged at $3.34 billion, which indicates an decline of 1.2% from the prior-year quarter.

The Zacks Consensus Estimate for earnings per share for the fourth quarter is currently pegged at 76 cents, which suggests a fall of 28% from the year-ago reported figure. The estimate has moved up 1% over the past 30 days. NEM has a trailing four-quarter earnings surprise of 0.99%, on average.

National Steel (SID - Free Report) currently has an Earnings ESP of +3.57% and a Zacks Rank of 3. SID is scheduled to report fourth-quarter fiscal 2021 numbers on Mar 9. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.11 billion, which suggests growth of 16% from the prior-year quarter.

The Zacks Consensus Estimate for National Steel’s quarterly earnings per share of 28 cents suggests a 46% plunge from the year-ago period’s reported number. The estimate has been revised 15% downward over the past 30 days. SID has a trailing four-quarter negative earnings surprise of 10.69%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

 


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