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Greif (GEF) Up 2.4% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Greif Bros. Corporation (GEF - Free Report) . Shares have added about 2.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 catalysts.
Greif reported adjusted earnings of $0.67 per share in second-quarter fiscal 2017 (ended Apr 30, 2017) which surged around 42.6% year over year. However, earnings fell short of the Zacks Consensus Estimate of $0.71.
Including one-time items, the company posted earnings of $0.61 per share compared to $0.53 per share recorded in the year-ago quarter.
Operational Update
Revenues increased 5.7% year over year to $887.4 million from $839.6 million generated in the prior-year quarter. Revenues, however, missed the Zacks Consensus Estimate of $899 million.
Cost of sales increased 6% year over year to $705.5 million. Gross profit grew 4.7% year over year to $181.9 million. Gross margin contracted 20 basis points to 20.5% in the quarter. Selling, general and administrative (SG&A) expenses went up 2.6% year over year to $97 million. Adjusted operating profit climbed 7.2% year over year to $84.9 million. Adjusted operating margin expanded 20 basis points to 9.6% in the quarter.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $624.3 million, up 5.9% from $589.6 million in the year-ago quarter. Adjusted operating profit climbed 11% year over year to $60.3 million from $54.3 million.
Paper Packaging: Sales were up 12.9% year over year to $188.7 million, on the back of growth in volumes and increased sales of specialty products. The segment reported an adjusted operating profit of $20.6 million, down 14.5% year over year, due primarily to increased input costs.
Flexible Products & Services: Sales from this segment declined 12.6% year over year to $66.6 million. A divestiture and foreign currency translation, both adversely affected net sales by $2.7 million and $4.0 million, respectively. The segment reported adjusted operating profit of $2.1 million compared to an operating loss of $1.1 million in the year-earlier quarter.
Land Management: The segment’s sales increased 18% year over year to $7.8 million. Operating income rose 4.35% year over year to $3.3 million.
Financial Position
Greif ended the quarter with cash and cash equivalents of $87 million compared with $103.7 million as of Oct 31, 2016. Cash provided by operating activities decreased to $59.6 million for the fiscal second quarter compared with $83.9 million in the year-ago quarter, due to raw material price increases and accelerated inventory purchases made in advance of those increases. Long-term debt was $1033.6 million as of Apr 30, 2017, compared with $974.6 million as of Oct 31, 2016.
On Jun 6, Greif declared a quarterly dividend of $0.42 per share of Class A Common Stock and $0.63 per share of Class B Common Stock. The dividends are payable on Jul 1 to stockholders of record at the close of business as of Jun 19, 2017.
Guidance
Greif slashed its fiscal 2017 adjusted earnings per share guidance to the range of $2.84–$3.02 from the prior band of $2.78–$3.08. Compared to the adjusted earnings per share of $2.44 in fiscal 2016, the guidance depicts year-over-year growth in the range of 16–24%.
The company also trimmed its fiscal 2017 free cash flow guidance range to $180–$200 million due to the recently approved organic growth expansions in the Rigid Industrial Packaging & Services and Paper Packaging & Services segments.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
At this time, the stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. 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 aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Greif (GEF) Up 2.4% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Greif Bros. Corporation (GEF - Free Report) . Shares have added about 2.4% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 catalysts.
Greif Lags Q2 Earnings & Sales Estimates, Trims View
Greif reported adjusted earnings of $0.67 per share in second-quarter fiscal 2017 (ended Apr 30, 2017) which surged around 42.6% year over year. However, earnings fell short of the Zacks Consensus Estimate of $0.71.
Including one-time items, the company posted earnings of $0.61 per share compared to $0.53 per share recorded in the year-ago quarter.
Operational Update
Revenues increased 5.7% year over year to $887.4 million from $839.6 million generated in the prior-year quarter. Revenues, however, missed the Zacks Consensus Estimate of $899 million.
Cost of sales increased 6% year over year to $705.5 million. Gross profit grew 4.7% year over year to $181.9 million. Gross margin contracted 20 basis points to 20.5% in the quarter. Selling, general and administrative (SG&A) expenses went up 2.6% year over year to $97 million. Adjusted operating profit climbed 7.2% year over year to $84.9 million. Adjusted operating margin expanded 20 basis points to 9.6% in the quarter.
Segmental Performance
Rigid Industrial Packaging & Services: This segment reported sales of $624.3 million, up 5.9% from $589.6 million in the year-ago quarter. Adjusted operating profit climbed 11% year over year to $60.3 million from $54.3 million.
Paper Packaging: Sales were up 12.9% year over year to $188.7 million, on the back of growth in volumes and increased sales of specialty products. The segment reported an adjusted operating profit of $20.6 million, down 14.5% year over year, due primarily to increased input costs.
Flexible Products & Services: Sales from this segment declined 12.6% year over year to $66.6 million. A divestiture and foreign currency translation, both adversely affected net sales by $2.7 million and $4.0 million, respectively. The segment reported adjusted operating profit of $2.1 million compared to an operating loss of $1.1 million in the year-earlier quarter.
Land Management: The segment’s sales increased 18% year over year to $7.8 million. Operating income rose 4.35% year over year to $3.3 million.
Financial Position
Greif ended the quarter with cash and cash equivalents of $87 million compared with $103.7 million as of Oct 31, 2016. Cash provided by operating activities decreased to $59.6 million for the fiscal second quarter compared with $83.9 million in the year-ago quarter, due to raw material price increases and accelerated inventory purchases made in advance of those increases. Long-term debt was $1033.6 million as of Apr 30, 2017, compared with $974.6 million as of Oct 31, 2016.
On Jun 6, Greif declared a quarterly dividend of $0.42 per share of Class A Common Stock and $0.63 per share of Class B Common Stock. The dividends are payable on Jul 1 to stockholders of record at the close of business as of Jun 19, 2017.
Guidance
Greif slashed its fiscal 2017 adjusted earnings per share guidance to the range of $2.84–$3.02 from the prior band of $2.78–$3.08. Compared to the adjusted earnings per share of $2.44 in fiscal 2016, the guidance depicts year-over-year growth in the range of 16–24%.
The company also trimmed its fiscal 2017 free cash flow guidance range to $180–$200 million due to the recently approved organic growth expansions in the Rigid Industrial Packaging & Services and Paper Packaging & Services segments.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.
Greif Bros. Corporation Price and Consensus
Greif Bros. Corporation Price and Consensus | Greif Bros. Corporation Quote
VGM Scores
At this time, the stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with an 'F'. 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 aggregte VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.