A month has gone by since the last earnings report for Sealed Air (SEE - Free Report) . Shares have added about 1.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Sealed Air due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Sealed Air Q4 Earnings & Revenue Top Estimates, Up Y/Y
Sealed Airdelivered fourth-quarter 2018 adjusted earnings per share of 75 cents surpassing the Zacks Consensus Estimate of 67 cents and also surging 29% year over year. Including special items, the company reported net earnings per share of $1.28, up from 14 cents in the year-ago quarter.
Total revenues increased 2.6% year over year on a reported basis to 1,260 million in the reported quarter. The figure outpaced the Zacks Consensus Estimate of $1,114 million. Unfavorable currency impact lowered total net sales by $48 million or 4%.
Cost and Margins
Cost of sales edged up 0.7% year over year to $861 million. Gross profit improved 7% to $399 million. Gross margin expanded 140 basis points (bps) to 31.7% in the fourth quarter.
SG&A expenses fell roughly 2% to $203 million from the prior-year quarter’s figure. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $248 million in the quarter compared with $238 million in the prior-year quarter. Adjusted EBITDA margin was 19.7% compared with 19.4% in the prior-year quarter.
Food Care: Net sales rose 1% year over year to $772 million. Adjusted EBITDA increased 12% year over year to $162 million.
Product Care: The segment reported net sales of $489 million, up 5% year over year. Adjusted EBITDA increased 5% to $85 million.
Cash and cash equivalents were $272 million as of Dec 31, 2018, down from $594 million as of Dec 31, 2017. Cash flow from operating activities was around $428 million in 2018 compared with $424 million in 2017. As of Dec 31, 2018, Sealed Air’s net debt came in at $3.2 billion, up from $2.7 billion as of Dec 31, 2017.
In, 2018, the company repurchased around 14.9 million shares for $583 million. Sealed Air has $775 million remaining under its current authorized share repurchase program. During the year, the company paid dividends worth $104 million.
Sealed Air reported adjusted earnings per share of $2.50 in 2018, up 38% from $1.81 in the prior year. Earnings surpassed the Zacks Consensus Estimate of $2.43. Sales increased 6% year over year to $4.73 billion, coming ahead of the Zacks Consensus Estimate of $4.72 billion.
Sealed Air projects adjusted earnings per at $2.65-$2.75 in fiscal 2019. Net sales growth is projected to be approximately 2% on reported basis and 5% in constant dollars. Adjusted EBITDA from continuing operations is expected to be $925-$945 million. Currency is expected to have an unfavorable impact of approximately $130 million on net sales and $25 million on adjusted EBITDA.
How Have Estimates Been Moving Since Then?
Fresh estimates followed an upward path over the past two months.
Currently, Sealed Air has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Sealed Air has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.