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The Zacks Consensus Estimate for WRK’s fiscal third-quarter revenues is pegged at $5.24 billion, suggesting a fall of 5% from the year-ago quarter's reported figure. The same for earnings per share is pegged at 49 cents, indicating a year-over-year decline of 68.2%. The consensus mark for the company’s fiscal third-quarter earnings has moved down 6% in the past 30 days.
Q2 Performance
In the last reported quarter, WestRock reported a year-over-year decline in adjusted earnings per share and revenues. While the top line missed the consensus estimate, earnings beat the same.
WRK’s earnings have surpassed the Zacks Consensus Estimate in three of the last four trailing quarters, while falling short in one quarter, delivering an earnings surprise of 11.9%, on average.
WestRock has been witnessing a slowdown in volumes in the corrugated packaging segment over the past few quarters. This has been mainly due to muted customer spending owing to the inflationary scenario. Customers have been also been rebalancing their inventory destocking.
Despite this overall weakness, the demand for corrugated packaging and containerboard for the packaging of essentials items such as food, beverage and medicines are likely to have remained stable. However, considering that the company has been facing labor shortages and supply-chain issues, this is expected to have impacted thr shipments to customers. All of these factors are likely to get reflected in the company’s top-line results in the third quarter of fiscal 2023.
While some costs were expected to have been favorable sequentially (natural gas, virgin fiber, chemicals and freight), the same is likely to have been higher than the last year’s comparable quarter. Higher recycled fiber costs are also likely to have hurt its margins.
Unfavorable non-cash pension expenses due to higher interest rates and market volatility are also expected to have impacted its profits in the fiscal third quarter. The company’s results are also likely to reflect the impact of approximately 121K tons of maintenance downtime, which is higher than the 46K of downtime in the last year’s quarter.
Pricing actions and productivity initiatives undertaken by the company are likely to have negated some of these headwinds. The company is expected to achieve $250 million in cost savings in fiscal 2023. A portion of this is expected to have benefited its third-quarter results.
Segmental Projections
The Zacks Consensus Estimate for WRK’s Consumer Packaging segment’s quarterly revenues is pegged at $1,211 million, suggesting a 5% drop from the prior-year period's reported figure. The segment’s adjusted EBITDA is estimated to be $144 million, indicating a year-over-year plunge of 39%.
For the Corrugated Packaging segment’s revenues, the consensus estimate is pinned at $2,597 million, implying growth of 9% from the year-ago quarter's reported number. The segment’s adjusted EBITDA is projected at $62 million, indicating an 84% year-over-year fall.
The revenue estimate for the Paper segment is pegged at $1,130 million, suggesting a decline of 30% from the prior-year reported figure. The same for the Distribution segment is pinned at $341 million, indicating a 5% year-over-year decline.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for WestRock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for WestRock is +2.78%. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Zacks Rank: WRK currently carries a Zacks Rank #5 (Strong Sell).
Share Price Performance
WestRock’s shares have lost 21.8% over the past year compared with the industry’s 9.4% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:
Livent Corporation , scheduled to release earnings on Aug 3, has an Earnings ESP of +2.43% and a Zacks Rank of 1.
The Zacks Consensus Estimate for LTHM’s earnings for the second quarter is currently pegged at 46 cents per share.
Ecolab Inc. (ECL - Free Report) , slated to release earnings on Aug 1, has an Earnings ESP of +0.50% and a Zacks Rank of 2.
The Zacks Consensus Estimate for ECL’s second-quarter earnings is pegged at a profit of $1.21 per share.
Axalta Coating Systems Ltd. (AXTA - Free Report) , which is slated to release earnings on Aug 1, has an Earnings ESP of +6.02% and a Zacks Rank of 2.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents per share.
Image: Bigstock
WestRock (WRK) to Report Q3 Earnings: What's in the Cards?
WestRock Company (WRK - Free Report) is scheduled to report third-quarter fiscal 2023 results (ended Jun 30, 2023) on Aug 3, before the opening bell.
Q3 Estimates
The Zacks Consensus Estimate for WRK’s fiscal third-quarter revenues is pegged at $5.24 billion, suggesting a fall of 5% from the year-ago quarter's reported figure. The same for earnings per share is pegged at 49 cents, indicating a year-over-year decline of 68.2%. The consensus mark for the company’s fiscal third-quarter earnings has moved down 6% in the past 30 days.
Q2 Performance
In the last reported quarter, WestRock reported a year-over-year decline in adjusted earnings per share and revenues. While the top line missed the consensus estimate, earnings beat the same.
WRK’s earnings have surpassed the Zacks Consensus Estimate in three of the last four trailing quarters, while falling short in one quarter, delivering an earnings surprise of 11.9%, on average.
WestRock Company Price and EPS Surprise
WestRock Company price-eps-surprise | WestRock Company Quote
Key Factors to Note
WestRock has been witnessing a slowdown in volumes in the corrugated packaging segment over the past few quarters. This has been mainly due to muted customer spending owing to the inflationary scenario. Customers have been also been rebalancing their inventory destocking.
Despite this overall weakness, the demand for corrugated packaging and containerboard for the packaging of essentials items such as food, beverage and medicines are likely to have remained stable. However, considering that the company has been facing labor shortages and supply-chain issues, this is expected to have impacted thr shipments to customers. All of these factors are likely to get reflected in the company’s top-line results in the third quarter of fiscal 2023.
While some costs were expected to have been favorable sequentially (natural gas, virgin fiber, chemicals and freight), the same is likely to have been higher than the last year’s comparable quarter. Higher recycled fiber costs are also likely to have hurt its margins.
Unfavorable non-cash pension expenses due to higher interest rates and market volatility are also expected to have impacted its profits in the fiscal third quarter. The company’s results are also likely to reflect the impact of approximately 121K tons of maintenance downtime, which is higher than the 46K of downtime in the last year’s quarter.
Pricing actions and productivity initiatives undertaken by the company are likely to have negated some of these headwinds. The company is expected to achieve $250 million in cost savings in fiscal 2023. A portion of this is expected to have benefited its third-quarter results.
Segmental Projections
The Zacks Consensus Estimate for WRK’s Consumer Packaging segment’s quarterly revenues is pegged at $1,211 million, suggesting a 5% drop from the prior-year period's reported figure. The segment’s adjusted EBITDA is estimated to be $144 million, indicating a year-over-year plunge of 39%.
For the Corrugated Packaging segment’s revenues, the consensus estimate is pinned at $2,597 million, implying growth of 9% from the year-ago quarter's reported number. The segment’s adjusted EBITDA is projected at $62 million, indicating an 84% year-over-year fall.
The revenue estimate for the Paper segment is pegged at $1,130 million, suggesting a decline of 30% from the prior-year reported figure. The same for the Distribution segment is pinned at $341 million, indicating a 5% year-over-year decline.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for WestRock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for WestRock is +2.78%. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Zacks Rank: WRK currently carries a Zacks Rank #5 (Strong Sell).
Share Price Performance
WestRock’s shares have lost 21.8% over the past year compared with the industry’s 9.4% decline.
Image Source: Zacks Investment Research
Stocks to Consider
Here are some companies in the basic materials space, which according to our model, have the right combination of elements to post an earnings beat this quarter:
Livent Corporation , scheduled to release earnings on Aug 3, has an Earnings ESP of +2.43% and a Zacks Rank of 1.
The Zacks Consensus Estimate for LTHM’s earnings for the second quarter is currently pegged at 46 cents per share.
Ecolab Inc. (ECL - Free Report) , slated to release earnings on Aug 1, has an Earnings ESP of +0.50% and a Zacks Rank of 2.
The Zacks Consensus Estimate for ECL’s second-quarter earnings is pegged at a profit of $1.21 per share.
Axalta Coating Systems Ltd. (AXTA - Free Report) , which is slated to release earnings on Aug 1, has an Earnings ESP of +6.02% and a Zacks Rank of 2.
The consensus estimate for AXTA’s earnings for the second quarter is currently pegged at 39 cents per share.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.