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Verso (VRS) to Report Q3 Earnings: What's in the Offing?

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Verso Corporation (VRS - Free Report) is scheduled to release third-quarter 2018 financial numbers before the opening bell on Nov 7.

Over the trailing four quarters, Verso surpassed the Zacks Consensus Estimate in one occasion, missed in the other two and met in another, the average negative beat being 24.62%.

Factors to Affect Q3 Results

Verso’s third-quarter results will benefit from structural changes in the Graphic Papers segment. The U.S. graphic industry operating rate was up significantly in first-half 2018 versus first-half 2017. Further, unbleached pulp demand has expanded worldwide due to growth in containerboard.

Verso Corporation Price and EPS Surprise


Verso Corporation Price and EPS Surprise | Verso Corporation Quote

However, inflation and freight costs will likely continue to impact the company’s performance.  Notably, net raw material input costs were up $8 million and freight costs are up $7 million, respectively, in second-quarter 2018, versus second-quarter 2017.

For the third quarter, Verso expects net sales of $700-720 million and pricing will remain favorable compared to second-quarter 2018. Capital expenditures are expected to be approximately $20-25 million, including residual investment for the No. 3 paper machine startup project at the Androscoggin Mill.

Nevertheless, the Zacks Consensus Estimate for earnings per share for the Sep-end quarter is pegged at $1.73, reflecting significant year-over-year growth of around 621%. The Zacks Consensus Estimate for total sales of $714 million also indicates 15% growth from the prior-year quarter.

Verso’s shares have outperformed the industry’s performance in the past year. The stock has surged around 290%, while the industry recorded a loss of 5% during the same time frame.


Earnings Whispers

Our proven model does not conclusively show that Verso is likely to beat estimates this quarter. This is because a stock must have the right combination of the two main ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here as you can see below.

Earnings ESP: Verso has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.73. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Verso currently sports a Zacks Rank #1.

Stocks Poised to Beat Earnings Estimates

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

Advance Auto Parts, Inc. (AAP - Free Report) has an Earnings ESP of +1.94% and a Zacks Rank #2. Its shares have surged 108% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Adobe Systems Incorporated (ADBE - Free Report) has an Earnings ESP of +0.19% and a Zacks Rank #2. The stock has gained 33% in a year’s time.

American Eagle Outfitters, Inc. (AEO - Free Report) has an Earnings ESP of +2.95% and a Zacks Rank #2. The company’s shares have rallied 76% during the past year.

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