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Greif (GEF) Acquires 80% Stake in Centurion to Boost Growth
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Greif, Inc. (GEF - Free Report) announced that it was increasing its ownership in Centurion Container LLC ("Centurion") from 9% to 80%. The move will further enhance Greif's presence in North America.
The $145-million deal is subject to customary closing adjustments. The all-cash transaction was funded by Greif's existing credit facility.
The financial results of Centurion will be reported under the Greif Global Industrial Packaging segment.
In 2020, Grief purchased 9% ownership in Centurion. In recent years, the joint venture has grown rapidly. The acquisition benefitted from shared commitments to develop a circular economy and reduce greenhouse gas emissions.
Grief has been gaining from its recent acquisitions. In 2022, Greif completed the acquisition of Lee Container Corporation, Inc. for $300 million. Lee Container is a leading manufacturer of high-performance barrier and conventional blow-molded containers. The buyout is expected to be immediately accretive to GEF’s margins, cash flow and earnings. The acquisition will provide Greif with immediate scale in jerry cans and small plastic bottles in North America.
However, the company has been bearing the brunt of declining demand across its product lines. The Global Industrial Packaging segment and Paper Packaging segment are facing lower volumes due to weak consumer spending in the United States, energy inflation in EMEA and Covid-led shutdowns in China.
GEF delivered adjusted earnings per share of $1.06 for first-quarter fiscal 2023. The bottom line decreased 17% year over year due to lower volume and selling prices. Sales were down 19% year over year to $1,271 million due to the lower volume of primary products sold, selling prices, product mix and the impact of changes in foreign currencies against the U.S. Dollar.
Price Performance
Greif’s shares have gained 2.2% in a year against the industry’s 3.4% decline.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 74.1% in the last year.
Encore Wire has an average trailing four-quarter earnings surprise of 146.8%. The Zacks Consensus Estimate for WIRE’s 2023 earnings is pegged at $19.76 per share. The consensus estimate for 2023 earnings has moved north by 1.7% in the past 60 days. Its shares gained 61.3% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings rose 4% in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 16.9% in the last year.
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Greif (GEF) Acquires 80% Stake in Centurion to Boost Growth
Greif, Inc. (GEF - Free Report) announced that it was increasing its ownership in Centurion Container LLC ("Centurion") from 9% to 80%. The move will further enhance Greif's presence in North America.
The $145-million deal is subject to customary closing adjustments. The all-cash transaction was funded by Greif's existing credit facility.
The financial results of Centurion will be reported under the Greif Global Industrial Packaging segment.
In 2020, Grief purchased 9% ownership in Centurion. In recent years, the joint venture has grown rapidly. The acquisition benefitted from shared commitments to develop a circular economy and reduce greenhouse gas emissions.
Grief has been gaining from its recent acquisitions. In 2022, Greif completed the acquisition of Lee Container Corporation, Inc. for $300 million. Lee Container is a leading manufacturer of high-performance barrier and conventional blow-molded containers. The buyout is expected to be immediately accretive to GEF’s margins, cash flow and earnings. The acquisition will provide Greif with immediate scale in jerry cans and small plastic bottles in North America.
However, the company has been bearing the brunt of declining demand across its product lines. The Global Industrial Packaging segment and Paper Packaging segment are facing lower volumes due to weak consumer spending in the United States, energy inflation in EMEA and Covid-led shutdowns in China.
GEF delivered adjusted earnings per share of $1.06 for first-quarter fiscal 2023. The bottom line decreased 17% year over year due to lower volume and selling prices. Sales were down 19% year over year to $1,271 million due to the lower volume of primary products sold, selling prices, product mix and the impact of changes in foreign currencies against the U.S. Dollar.
Price Performance
Greif’s shares have gained 2.2% in a year against the industry’s 3.4% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Greif currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Encore Wire (WIRE - Free Report) and Illinois Tool Works (ITW - Free Report) . OI and WIRE flaunt a Zacks Rank #1 (Strong Buy) at present, and ITW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 74.1% in the last year.
Encore Wire has an average trailing four-quarter earnings surprise of 146.8%. The Zacks Consensus Estimate for WIRE’s 2023 earnings is pegged at $19.76 per share. The consensus estimate for 2023 earnings has moved north by 1.7% in the past 60 days. Its shares gained 61.3% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings rose 4% in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 16.9% in the last year.