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Reasons Why You Should Avoid Investing in Berry Global (BERY)
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Berry Global Group, Inc. (BERY - Free Report) is grappling with persistent supply-chain issues, rising raw material costs, high debt levels and foreign-currency headwinds.
The current Zacks Rank #4 (Sell) player has a market capitalization of $7.5 billion. In the past year, the stock has lost 15.7% compared with the industry’s 0.1% decline.
Let’s discuss the factors that might continue to take a toll on the firm.
Image Source: Zacks Investment Research
Steep Costs and Expenses: Berry Global has been witnessing inflationary increases in costs and expenses over time. In fiscal 2022 (ended Sep 30, 2022), BERY’s cost of sales increased 6.8% on a year-over-year basis. Also, in the same period, the adjusted operating margin declined 120 basis points on a year-over-year basis to 8.8%. Escalation in raw material price and other costs and challenges related to labor and supply-chain constraints are expected to persist in the quarters ahead, affecting BERY’s margins and profitability.
High Debt Level: In the last five fiscal years (2018-2022), the company’s long-term debt witnessed a 9.7% CAGR. BERY’s current and long-term debt remained high at $9,255 million at the end of fourth-quarter fiscal 2022, despite its effort to lower debts. Also, Berry Global’s debt/capital ratio is currently 0.75, higher than 0.64 for the industry. Such high debt levels raise concerns for the company.
Forex Woes: Given its widespread presence in the international markets, Berry Global is exposed to unfavorable foreign currency movement. For instance, in fiscal 2022, foreign exchange headwinds had an adverse impact of $420 million on its revenues, year over year. A stronger U.S. dollar might depress BERY's overseas business results in the quarters ahead.
Southbound Estimate Trend: In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 (ending September 2023) earnings has been revised 6% downward.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Image: Bigstock
Reasons Why You Should Avoid Investing in Berry Global (BERY)
Berry Global Group, Inc. (BERY - Free Report) is grappling with persistent supply-chain issues, rising raw material costs, high debt levels and foreign-currency headwinds.
The current Zacks Rank #4 (Sell) player has a market capitalization of $7.5 billion. In the past year, the stock has lost 15.7% compared with the industry’s 0.1% decline.
Let’s discuss the factors that might continue to take a toll on the firm.
Image Source: Zacks Investment Research
Steep Costs and Expenses: Berry Global has been witnessing inflationary increases in costs and expenses over time. In fiscal 2022 (ended Sep 30, 2022), BERY’s cost of sales increased 6.8% on a year-over-year basis. Also, in the same period, the adjusted operating margin declined 120 basis points on a year-over-year basis to 8.8%. Escalation in raw material price and other costs and challenges related to labor and supply-chain constraints are expected to persist in the quarters ahead, affecting BERY’s margins and profitability.
High Debt Level: In the last five fiscal years (2018-2022), the company’s long-term debt witnessed a 9.7% CAGR. BERY’s current and long-term debt remained high at $9,255 million at the end of fourth-quarter fiscal 2022, despite its effort to lower debts. Also, Berry Global’s debt/capital ratio is currently 0.75, higher than 0.64 for the industry. Such high debt levels raise concerns for the company.
Forex Woes: Given its widespread presence in the international markets, Berry Global is exposed to unfavorable foreign currency movement. For instance, in fiscal 2022, foreign exchange headwinds had an adverse impact of $420 million on its revenues, year over year. A stronger U.S. dollar might depress BERY's overseas business results in the quarters ahead.
Southbound Estimate Trend: In the past 60 days, the Zacks Consensus Estimate for fiscal 2023 (ending September 2023) earnings has been revised 6% downward.
Stocks to Consider
Some better-ranked companies from the Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy) and has a trailing four-quarter earnings surprise of 24.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks.
AIT’s earnings estimates have increased 4.6% for fiscal 2023 in the past 60 days. Shares of Applied Industrial have risen 24.7% in the past year.
MRC Global Inc. (MRC - Free Report) presently has a Zacks Rank of 1. MRC’s earnings surprise in the last four quarters was 103%, on average.
In the past 60 days, MRC Global’s earnings estimates have increased 42% for 2022. The stock has rallied 56.4% in the past year.
Titan International, Inc. presently carries a Zacks Rank #2 (Buy). Its earnings surprise in the last four quarters was 49.6%, on average.
In the past 60 days, TWI’s earnings estimates have increased 1.4% for 2022. The stock has surged 74.5% in the past year.