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Sealed Air (SEE) to Report Q1 Earnings: What to Expect?

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Sealed Air Corporation (SEE - Free Report) is scheduled to report first-quarter fiscal 2018 results on May 3, before the opening bell.
 
Notably, the company’s earnings performance has not been impressive for the past few quarters. In the last reported quarter, Sealed Air’s earnings and revenues both improved on a year-over-year basis and beat the Zacks Consensus Estimates on both counts. However, in the trailing four quarters, the company beat the Zacks Consensus Estimate on one occasion, missing two and meeting one, recording an average negative earnings surprise of 1.89%.
 
Let’s see how things are shaping up for this announcement.
 
Sealed Air Corporation Price and EPS Surprise
 
Key Factors to Consider
 
The Zacks Consensus Estimate for revenues for the first-quarter 2018 is pegged at $1.14 million, representing a year-over-year improvement of 10%. We believe Sealed Air’s top-line will also be supported by enhanced demand for its core product portfolio and accelerated growth in the global protein market along with the e-Commerce sector. Currency is anticipated to have a favorable impact. Ongoing focus on innovations and impact of prior acquisitions will also boost the top line.
 
The company continues to drive profitable growth by improving productivity with its Sealed Air Operational Excellence culture. However, the first quarter will be a low point for EBITDA, primarily due to the timing of its contract pass-through and higher input costs. Further, stranded costs following the Diversey sale remains a headwind. Sealed Air continues to invest in R&D, sales and marketing. Even though these investments will drive future growth, it will affect margins in the near term.
 
The Zacks Consensus Estimates for earnings per share is pegged at 50 cents for first-quarter 2018, up 16% year over year.
 
 
Over the past six months, shares of Sealed Air have gained 1.0%, outperforming 0.7% growth recorded by the industry due to the prevailing headwinds.
 
Earnings Whispers
 
Our proven model does not conclusively show that Sealed Air is likely to beat on earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
 
Zacks ESP: Sealed Air currently has an Earnings ESP of -0.60%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank:  Sealed Air’s Zacks Rank #2 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
 
We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
 
Stocks to Consider
 
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
 
MSA Safety Incorporated (MSA - Free Report) has an Earnings ESP of +3.46% and a Zacks Rank #1. The company’s shares have advanced 9% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Rexnord Corporation (RXN - Free Report) has an Earnings ESP of +1.82% and a Zacks Rank #2. Its shares have gained 11%, over the past six months. 
 
Reliance Steel & Aluminum Co. (RS - Free Report) has an Earnings ESP of +13.39% and a Zacks Rank #1. The stock has climbed 16% in six months’ time.
 
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