It has been about a month since the last earnings report for Amcor (
AMCR Quick Quote AMCR - Free Report) . Shares have lost about 3.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amcor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Amcor Q3 Earnings In Line With Estimates, View Lowered
Amcor reported third-quarter fiscal 2023 adjusted earnings per share of 18 cents, which came in line with the Zacks Consensus Estimate. The bottom line declined 14% from the prior-year quarter due to lower volumes.
Including special items, the company reported net earnings per share of 12 cents, down 33% from the prior-year quarter’s 18 cents. Total revenues for the quarter were $3,667 million, which missed the Zacks Consensus Estimate of $3,705 million. Revenues were down 1% in comparison with the year-ago quarter. This included a negative currency impact of 2% and an unfavorable impact of 2% related to items affecting comparability. These were offset by a price increase of approximately 2%. Net sales on a comparable constant-currency basis were 1% higher than last year quarter, reflecting price/mix benefits of approximately 4%, partly offset by 3% lower volumes. Costs and Margins
The cost of sales increased 0.6% year over year to $2,994 million. Gross profit dipped 8% year over year to $673 million. The gross margin was 18.4% for the quarter under review, reflecting a contraction from 19.7% reported in the prior-year quarter.
SG&A expenses decreased 3% year on year to $317 million from $326 million in the prior-year quarter. Adjusted operating income in the quarter under review was $382, million compared with $427 million in the prior-year quarter. The adjusted operating margin was 10.4%, compared with 11.5% in the prior-year quarter. Segment Performances
The Flexibles segment’s net sales decreased 2% year over year to $2,787 million. Adjusted operating profit was $337 million, marking an 11% decline from the prior-year quarter’s figure.
The Rigid Packaging segment’s net sales were $880 million in the quarter under review, up 1% from the prior-year quarter. Adjusted operating profit for the segment declined 10% year over year to $69 million. Financial Updates
As of the end of third-quarter fiscal 2023, Amcor had $564 million of cash and cash equivalents, compared with $775 million at fiscal 2022-end. The company generated $329 million in cash from operating activities in the first nine-month period of fiscal 2023, compared with $589 million in the prior-year comparable period.
AMCR reported an adjusted free cash outflow of $14 million in the first nine months of fiscal 2023 against $263 million in the comparable period of the last fiscal year. As of Mar 31, 2023, Amcor’s net debt totaled $6.4 billion. Amcor repurchased 18 million shares for $200 million in the first nine months of fiscal 2023. AMCR has targeted total share repurchases of $500 million for fiscal 2023. Fiscal 2023 Guidance
Amcor expects an adjusted comparable constant currency EPS decline of 1-4% for fiscal 2023. The company anticipates weak demand in the fourth quarter and a mid-single digit decline in overall volumes compared with last year. Adjusted EPS is expected to be in the band of 72-74 cents, revised downward from the prior stated range of 77-81 cents.
The guidance also factors in a 2% gain from share repurchases that will be partly offset by a negative impact of 4% related to higher interest expenses and tax. A stronger dollar will impact earnings by 4%. AMCR also anticipates a negative impact of 3% associated with the sale of its three plants in Russia. The company projects an adjusted free cash flow of $800-$900 million. How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -15.4% due to these changes.
Currently, Amcor has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. 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 Amcor has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Amcor is part of the Zacks Containers - Paper and Packaging industry. Over the past month, Sonoco (
SON Quick Quote SON - Free Report) , a stock from the same industry, has gained 0.5%. The company reported its results for the quarter ended March 2023 more than a month ago.
Sonoco reported revenues of $1.73 billion in the last reported quarter, representing a year-over-year change of -2.3%. EPS of $1.40 for the same period compares with $1.85 a year ago.
Sonoco is expected to post earnings of $1.53 per share for the current quarter, representing a year-over-year change of -13.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
Sonoco has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.