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WestRock (WRK) Tops Q4 Earnings, Synergy Targets in Line

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WestRock Company (WRK - Free Report) reported fourth-quarter fiscal 2016 (ended Sep 30, 2016) adjusted earnings of 71 cents per share that beat the Zacks Consensus Estimate of 62 cents, posting a positive earnings surprise of 15%.

Including one-time items, the company reported a loss per share of 34 cents per share in the quarter resulting from a 91 cents per share non-cash charge related to the transfer of certain pension plan assets and liabilities to a third party.

 

Operational Update

WestRock’s total revenue slipped 0.1% year over year to $3.612 billion, outpacing the Zacks Consensus Estimate of $3,602 million.

Cost of sales dipped 1% year over year to $2,892 million in the quarter. Gross profit increased 5% to $719 million. Gross margin expanded 90 basis points to 19.9% in the quarter. Segment income was $330 million compared with $310 million in the prior-year quarter.

Segmental Performance

Corrugated Packaging: Sales at the segment improved 16% year over year to $2,004 million in the quarter. Segment income tanked 43% year over year to $192 million.

Consumer Packaging: Sales at the segment declined 20% to $1,622 million from the year-ago quarter. Segment income surged around 61% year over year to $139 million.

Land and Development: The segment’s sales were $43.7 million compared with $45 million in the prior-year quarter. Operating loss for the segment was $1.6 million compared with operating loss of $3.4 million in the prior-year quarter.

Fiscal 2016 Performance

For fiscal 2016, WestRock’s adjusted earnings per share came at $2.53, failing to match the Zacks Consensus Estimate of $2.56. Including one-time items, earnings for the fiscal was 59 cents.

Revenues came in at $14.2 billion, falling short of the Zacks Consesnus Estimate of $14.6 billion.

Financial Position

The company generated cash flow from operations of $381.6 million in the reported quarter compared with $387 million in the prior-year quarter. For the fiscal 2016, cash flow from operating activities was $1.7 billion compared with $1.2 billion in the prior fiscal year.

The company had $340.9 million in cash and cash equivalents at the end of fiscal 2016 compared with $207.8 million at fiscal 2015 end. The company’s total debt was $5,789 million at fiscal 2016 end compared with $5,621 million at fiscal 2015 end.

WESTROCK CO Price, Consensus and EPS Surprise
 

WESTROCK CO Price, Consensus and EPS Surprise | WESTROCK CO Quote

During fiscal 2016, WestRock invested $797 million in capital expenditures, deployed $588 million to strategic merger and acquisition opportunities. In sync with its balanced capital allocation strategy, the company meanwhile paid $381 million in dividends and returned $335 million to its stockholders through share repurchases.

In the quarter, WestRock has achieved $89 million in year-over-year productivity improvements and annual run rate of $500 million of synergy and performance improvements. In fiscal 2016, WestRock has captured $384 million of productivity improvements. The company is on track to meet its $1 billion synergy and performance improvement goal.

Zacks Rank

WestRock currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the sector include Fibria Celulose S.A. (FBR - Free Report) , Koppers Holdings (KOP - Free Report) and Hecla Mining Co. (HL - Free Report) .

Fibria Celulose has an earnings ESP of 24.58% in the last four trailing quarters and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Koppers Holdings also sports a Zacks Rank #1 and has a positive average earnings surprise of 72.99% in the last four quarters.

Hecla Mining carries a Zacks Rank #1 and has delivered an average positive earnings surprise of 131.25% in the last four quarters.

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