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Greif (GEF) to Report Q3 Earnings: What's in the Offing?

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Greif, Inc. (GEF - Free Report) is scheduled to release third-quarter fiscal 2019 financial numbers, after the closing bell on Aug 28. We note that the earnings of this Delaware, OH-based company surpassed estimates in three of the trailing four quarters, the average positive surprise being 1.68%.

Where Are Q3 Estimates Heading?

The Zacks Consensus Estimate for the company’s earnings is pegged at $1.18 for the fiscal third quarter, indicating an improvement of 32.58% from the year-ago quarter’s reported figure. We note that the consensus estimate has remained unchanged over the past 30 days.

The Zacks Consensus Estimate for total revenues for the quarter under review is pegged at $1.18 billion, reflecting a 1.67% decline from the year-ago quarter’s reported number.

Greif, Inc. Price and EPS Surprise

 

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

Key Factors to Consider

In the third quarter of fiscal 2019, Greif is poised to gain from its ongoing focus on operational execution and capital discipline, and the Caraustar acquisition. However, the impact of unfavorable currency remains a headwind.

The Rigid Industrial Packaging & Services segment remained challenged in the last reported quarter due to the prevailing soft demand in global markets. Volume weakness was pronounced in West and Central Europe, the Asia Pacific region, and the U.S. Gulf Coast on account of trade uncertainty and reduced chemical import demand from China. This is likely to continue in the third quarter of fiscal 2019 as well. Volatile currency exchange rates are also anticipated to impact the segment’s results. Further, price decline will likely affect the segment’s margins.

The Zacks Consensus Estimate for the Rigid Industrial Packaging & Services segment’s sales is pegged at $679 billion for the to-be-reported quarter, suggesting a 1% dip from the year-ago reported figure. The segment is expected to report an operating profit of $64 million, indicating a 3% decline from the year-earlier quarter’s reported number of $66 million.

In February 2019, the company completed the acquisition of Caraustar Industries, Inc. and is currently integrating its operations. The buyout strengthened Greif’s leadership in industrial packaging, and significantly bolstered its margins, free cash flow and profitability.

In the second quarter of fiscal 2019, the Paper Packaging segment’s results improved significantly due to the Caraustar acquisition and the third quarter will be no exception. However, the ongoing market softness will somewhat dent results. The Zacks Consensus Estimate for net sales of Paper Packaging & Services business segment is currently pegged at $596 million for the quarter to be reported, suggesting a whopping 153% improvement from the year-ago quarter’s reported figure. The Paper Packaging & Services segment’s operating income is projected at $76 million, up 71% from the $44 million reported in the prior-year quarter.

The Zacks Consensus Estimate for the Flexible Products & Services segment’s revenues is pegged at $84 million, suggesting 1% rise from $83 million recorded in the prior-year quarter. The segment’s operating profit is currently pinned at $6.5 million, calling for 12% year-over-year growth.  Ongoing market softness in Western Europe remains a concern for the segment.

The Zacks Consensus Estimate for the Land Management segment’s revenues is pegged at $6.9 million, up from $5.9 million recorded in the year-ago quarter. The Zacks Consensus Estimate for operating profit for the segment is pinned at $2 million, suggesting growth of 44% from the prior-year quarter’s reported figure.

Share Price Performance
 


Over the past year, Greif’s shares have dipped 39.6% compared with the industry’s decline of 34.4%.

Earnings Whispers

Our proven model does not conclusively predict that Greif is likely to beat estimates in third-quarter fiscal 2019. A stock needs to have — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Greif has an Earnings ESP of +0.00% as the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at $1.18.

Zacks Rank: The company currently has a Zacks Rank #3, which makes surprise prediction difficult.

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

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:

Caseys General Stores, Inc. (CASY - Free Report) presently has an Earnings ESP of +8.43% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. (BURL - Free Report) currently has an Earnings ESP of +0.17% and a Zacks Rank #2.

The Cooper Companies, Inc. (COO - Free Report) has an Earnings ESP of +1.50% and a Zacks Rank #2 at present.

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