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Crown (CCK) Up 3.1% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Crown Holdings (CCK - Free Report) . Shares have added about 3.1% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Crown 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 drivers.

Crown Holdings Q4 Earnings & Sales Top Estimates, Up Y/Y

Crown Holdings reported fourth-quarter 2021 adjusted EPS of $1.66, outpacing the Zacks Consensus Estimate of $1.54. The bottom line rose 10.6% year over year and surpassed the EPS guidance of $1.50 and $1.55.

Including one-time items, the company incurred a loss of $7.95 per share in the quarter under review, against earnings of $1.12 in the fourth quarter of 2020.

Net sales in the quarter totaled $3,054 million, up from the year-ago quarter’s $2,460 million. The top line benefited from increased beverage can and transit packaging sales unit volumes and pass through of higher material costs. The reported figure beat the Zacks Consensus Estimate of $2,796 million.

Cost and Margins

The cost of products sold increased 31% year over year to $2,481 million. On a year-over-year basis, gross profit moved up 1.8% to $573 million. Gross margin contracted to 18.8% from the year-ago quarter’s 22.9%.

Selling and administrative expenses rose 4.3% year over year to $145 million. Segment operating income came in at $357 million during the quarter under review compared with the prior-year quarter’s $358 million. The operating margin came in at 11.7% compared with 14.5% in the prior-year quarter.

Segment Performance

Net sales in the Americas Beverage segment totaled $1,201 million, up 25% year over year. Segment operating profit declined 7.6% year over year to $181 million.

The European Beverage segment’s sales were up 22% year over year to $462 million. Operating income came in at $43 million compared with the year-ago quarter’s $63 million.

The Asia-Pacific segment’s revenues totaled $381 million, reflecting year-over-year growth of 21%. Operating profit was $51 million compared with the prior-year quarter’s $50 million.

Revenues in the Transit Packaging segment totaled $692 million compared with the year-ago quarter’s $523 million. Operating profit climbed 28% year over year to $83 million.

Financial Update

Crown Holdings had cash and cash equivalents of $531 million at the end of 2021, down from $1,173 million at 2020-end. The company generated $905 million cash from operating activities in 2021 compared with $1,315 million in 2020. In 2021, the company returned more than $1 billion to shareholders.

Crown Holdings’ long-term debt declined to $6,052 million as of Dec 31, 2021, from $8,023 million as of Dec 31, 2020.

Business Update

During the quarter, Crown Holdings completed the sale of its European Tinplate businesses and fully settled its U.K. pension obligations. Consequently, pension obligations were reduced by approximately $3 billion.

2021 Performance

Crown Holdings reported an adjusted EPS of $7.66 in 2021 compared with $5.92 reported in the prior year. Earnings beat the Zacks Consensus Estimate of $7.54. Including one-time items, the company reported a loss per share of $4.30 against earnings of $4.30 per share in 2020.

Sales were up 21% year over year to $11.4 billion. The top line missed the Zacks Consensus Estimate of $11.6 billion.

Outlook

Crown Holdings projects first-quarter 2022 adjusted EPS between $1.80 and $1.90. For the current year, the company anticipates adjusted EPS in the range of $8.00-$8.20. EBITDA is expected to grow more than 12% to approximately $2 billion.

Beverage can demand growth remains strong and the company is expected to benefit from this trend. Crown Holdings continues to implement several beverage-can capacity-expansion projects to meet the surging beverage-can demand. The company is focused on the construction of new plants and the addition of production lines to its existing facilities.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

VGM Scores

Currently, Crown has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Crown has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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