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Silgan (SLGN) Down 4.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Silgan Holdings (SLGN - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Silgan due for a breakout? 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.

Silgan’s Q1 Earnings Meet Estimates, Revenues Dip Y/Y

Silgan reported first-quarter 2023 adjusted earnings of 78 cents per share, in line with the Zacks Consensus Estimate and the year-ago quarter’s adjusted figure. Quarterly earnings were also within the guidance of 75-85 cents.

Including one-time items, earnings were 65 cents per share compared with the 76 cents reported in the prior-year quarter.

Total revenues fell 1.7% year over year to $1,418 million, missing the Zacks Consensus Estimate of $1,449 million.

Cost and Margins

During first-quarter 2023, the cost of goods sold decreased 2.3% year over year to $1,180 million. The gross profit increased 1.7% to $238 million. The gross margin was 16.8% compared with the prior-year quarter’s 16.2%.

Selling, general and administrative expenses were $101.4 million in the reported quarter compared with the year-ago quarter’s $100 million. The company reported an operating income of $131.2 million in the quarter compared with $143.4 million in the prior-year quarter. The operating margin was 9.3% in the reported quarter compared with the prior-year quarter’s 9.9%.

Segmental Performance

Revenues in the Dispensing and Specialty Closures segment were down 3% year over year to $580 million. The segment’s operating income was $70.9 million compared with $87.3 million in the prior-year comparable period. The price increase in the segment was offset by lower volume/mix.

The Metal Containers segment’s revenues increased 3% year over year to $670 million. Operating income in the segment amounted to $47.8 million compared with the prior-year quarter’s $38 million. The upside was driven by higher unit volume and favorable price/mix.

In the Custom Containers segment, revenues were $168 million compared with the year-ago quarter’s $193 million. The segment reported an operating profit of $18.5 million, down 25.1% year over year. The segment witnessed lower price/mix due to the contractual pass-through of lower resin costs.

Financial Updates

The company had cash and cash equivalents of $501.1 million at the end of first-quarter 2023 compared with $259.6 million at the end of the prior-year quarter. The company utilized around $632 million cash in operating activities in the first quarter compared with $267 million in the year-ago quarter.

2023 Outlook

Silgan confirmed its 2023 guidance for adjusted EPS between $3.95 and $4.15, including a headwind of 20 cents per share for additional interest expenses.

For second-quarter 2023, Silgan anticipates adjusted EPS of 85-95 cents, whereas it reported $1.08 in second-quarter 2022.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -12.06% due to these changes.

VGM Scores

At this time, Silgan 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.


Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Silgan has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

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