Shares of Bemis Company, Inc. (BMS - Free Report) touched a 52-week low of $41.78 on Aug 9, though it recovered to close the day at $42.04.
A glimpse of Bemis’ share price movement reveals that it has underperformed the industry it belongs to, in the past one year. The stock fell 16.24%, as against the industry’s growth of 10.06%.
Notably, this Zacks Rank #5 (Strong Sell) stock has been down 4% since it reported second-quarter 2017 results.
What’s Hurting Bemis?
This maker of flexible packaging products and pressure sensitive materials posted its second-quarter results on Jul 27. Its top and bottom lines witnessed year-over-year decline in the quarter, missing the Zacks Consensus Estimate on both counts. Results in the quarter were affected by challenging economic environment in Brazil due to the political instability.
Bemis lowered its 2017 adjusted earnings per share guidance range to $2.35–$2.50 due to the tough economic environment in Brazil. It remains concerned about its original profit plans in the region due to extreme declines and lower mix of product driven by the economic environment. It also expects that the third and fourth quarters will witness volume challenges due to the reason.
Bemis also trimmed its cash from operations guidance range to $400–$425 million and expects capital expenditures for 2017 between $185 million and $200 million, down from the original plan. Less capital spending will thwart growth.
Further, Bemis expects $35 million of restructuring expense in 2017 related to the cost savings plan announced in June. About two-third of the restructuring expense was recorded in the second quarter. The remainder will be recorded in the upcoming quarters. This expense will drag the company’s’ profit in the near term.
Also, downward estimate revisions over the last 30 days added to Bemis’ losing value in the market. Analysts have turned bearish on the company’s prospects and are therefore revising down estimates. The Zacks Consensus Estimate for 2017 deteriorated to earnings of $2.37 per share from $2.55 per share, over the last 30 days.
Stocks to Consider
Some better-ranked stocks in the same sector are AGCO Corporation (AGCO - Free Report) , Caterpillar Inc. (CAT - Free Report) and Terex Corporation (TEX - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AGCO has expected long-term growth rate of 13.51%.
Caterpillar has expected long-term growth rate of 9.50%.
Terex has expected long-term growth rate of 19.67%.
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