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What's in the Card's for Sealed Air (SEE) in Q2 Earnings?

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Sealed Air Corporation (SEE - Free Report) is scheduled to report second-quarter 2018 results on Aug 2, before the opening bell.
 
In the last reported quarter, Sealed Air’s adjusted earnings per share beat the Zacks Consensus Estimate by 2%. Notably, the company delivered an average positive earnings surprise of 0.24% over the trailing four quarters.

Let’s see how things are shaping up prior to this announcement.

Sealed Air Corporation Price and EPS Surprise

 

Sealed Air Corporation Price and EPS Surprise | Sealed Air Corporation Quote

Key Factors to Consider

Sealed Air’s second-quarter results are expected to reflect benefits from elevated demand for its core product portfolio and accelerated growth in the global protein market, along with the e-commerce sector. Notably, rising demand for packaged proteins and convenience meals will drive the company’s performance, going ahead. Particularly, the ongoing shift to fresh foods in North America and EMEA, combined with sustainable innovative packaging, is the major driving factor for spurring demand.

Further, strong prospects in high-growth geographies such as Brazil, Russia, China and Southeast Asia, seasonality and improvement in the timing of contract pass-through will have a favorable impact on earnings. The Zacks Consensus Estimates for earnings per share is pegged at 58 cents for the to-be-reported quarter, up around 66% year over year.

The Zacks Consensus Estimate for revenues for the June-end quarter is pegged at $1.15 billion, representing a year-over-year improvement of 7.7%. We believe Sealed Air’s results will be supported by its focus on reducing cost structure, driving operational excellence and commercializing new innovations, combined with favorable global business trends. Impact of prior acquisitions will also boost revenues.
 
However, stranded costs following the Diversey sale remains a headwind. Sealed Air continues to invest in R&D and sales and marketing. Even though these investments will drive future growth, it will affect margins in the near term.
 
Over the past year, shares of Sealed Air have gained 1.0%, underperforming 4% 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:
 
Earnings ESP:
Sealed Air currently has an Earnings ESP of -0.57%. 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 #3 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 Poised to Beat Earnings Estimates

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:

American Eagle Outfitters, Inc. (AEO - Free Report) , with an Earnings ESP of +5.22% and a Zacks Rank #2. The company’s shares have surged around 111% over the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Adamas Pharmaceuticals, Inc. (ADMS - Free Report) , with an Earnings ESP of +3.41% and a Zacks Rank #3. The stock has gained around 36% in a year’s time.

The AES Corporation (AES - Free Report) , with an Earnings ESP of +3.01% and a Zacks Rank #3. Its shares have rallied around 19% in the past year.

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