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Silgan (SLGN) Down 1.1% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Silgan Holdings (SLGN - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Silgan due for a breakout? 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.
Silgan Q2 Earnings & Sales Beat Estimates, Up Y/Y
Silgan Holdings reported second-quarter 2019 adjusted earnings of 55 cents per share, beating the Zacks Consensus Estimate of 54 cents. Further, the figure improved 6% from the year-ago quarter. Earnings figure improved on volume increase in the metal container business and growth in pet food volumes.
Including one-time items, the company’s earnings per share came in at 28 cents compared with the prior-year quarter’s 50 cents.
Total revenues were up 3.2% year over year to $1,093 million, surpassing the Zacks Consensus Estimate of $1,077 million. The top-line figure increased on higher net sales in the metal container businesses, partially offset by a decline in net sales in the closures and plastic container business.
Cost and Margins
In second-quarter 2019, cost of goods sold went up 2.6% to $909.7 million from $885.8 million a year ago. Gross profit increased 5.8% year over year to $183.5 million. Gross margin came in at 16.7% compared to year-ago quarter’s 16.3%.
Selling, general and administrative expenses flared up 2.1% year over year to $80 million during the June-end quarter. Adjusted operating income climbed 3.6% to $113.6 million from $109.6 million recorded in the year-ago quarter. Operating margin was 10.4% in the quarter compared with 10.3% recorded in the year-ago quarter.
Segment Performance
Revenues in the Metal Containers segment jumped 9.6% year over year to $575.6 million. The segment’s adjusted operating income increased 9.2% year over year to $53 million.
The Closures segment’s revenues declined 4% year over year to $363.4 million. Adjusted operating income was $47.1 million in the reported quarter, down 1.26% from the prior-year quarter.
In the Plastic Containers segment, revenues edged down to $154.2 million from $155.4 million reported in the prior-year quarter. The segment reported an adjusted profit of $13.5 million, up from $13.4 million in the year-ago quarter.
Financial Updates
The company reported cash and cash equivalents of $111.3 million at the end of the second quarter, down from the year-earlier quarter end’s balance of $181.2 million. The company utilized $129 million of cash in operations during the second quarter compared with $93 million in the prior-year quarter.
Business Updates
This June, Silgan announced the wrapping up of its two metal container manufacturing facilities in Mt. Vernon, MI and Waupun, WI. Both facilities are expected to be shut down during the fourth quarter this year. As a result, the company recognized pre-tax rationalization charges of $2.5 million during the reported quarter. These plant closures also mark the company’s complete withdrawal from the Central States Pension Fund. In the second quarter, the company recognized pre-tax rationalization charge of around $36.2 million for withdrawal liability.
Outlook
Silgan has maintained its adjusted earnings per share in the range of $2.10 to $2.20 for the ongoing year compared with the prior year’s $2.08. The guidance for 2019 includes an unfavorable non-cash pension impact of approximately 13 cents per share resulting from significant market declines in investment values at the end of 2018 that negatively impacted the assets held in the company’s pension plans.
Silgan provided adjusted earnings per share guidance of 73-78 cents for the third quarter of 2019 compared with earnings per share of 76 cents recorded in third-quarter 2018. The guidance includes an unfavorable non-cash pension impact of approximately 3 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Silgan has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Silgan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Silgan (SLGN) Down 1.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Silgan Holdings (SLGN - Free Report) . Shares have lost about 1.1% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Silgan due for a breakout? 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.
Silgan Q2 Earnings & Sales Beat Estimates, Up Y/Y
Silgan Holdings reported second-quarter 2019 adjusted earnings of 55 cents per share, beating the Zacks Consensus Estimate of 54 cents. Further, the figure improved 6% from the year-ago quarter. Earnings figure improved on volume increase in the metal container business and growth in pet food volumes.
Including one-time items, the company’s earnings per share came in at 28 cents compared with the prior-year quarter’s 50 cents.
Total revenues were up 3.2% year over year to $1,093 million, surpassing the Zacks Consensus Estimate of $1,077 million. The top-line figure increased on higher net sales in the metal container businesses, partially offset by a decline in net sales in the closures and plastic container business.
Cost and Margins
In second-quarter 2019, cost of goods sold went up 2.6% to $909.7 million from $885.8 million a year ago. Gross profit increased 5.8% year over year to $183.5 million. Gross margin came in at 16.7% compared to year-ago quarter’s 16.3%.
Selling, general and administrative expenses flared up 2.1% year over year to $80 million during the June-end quarter. Adjusted operating income climbed 3.6% to $113.6 million from $109.6 million recorded in the year-ago quarter. Operating margin was 10.4% in the quarter compared with 10.3% recorded in the year-ago quarter.
Segment Performance
Revenues in the Metal Containers segment jumped 9.6% year over year to $575.6 million. The segment’s adjusted operating income increased 9.2% year over year to $53 million.
The Closures segment’s revenues declined 4% year over year to $363.4 million. Adjusted operating income was $47.1 million in the reported quarter, down 1.26% from the prior-year quarter.
In the Plastic Containers segment, revenues edged down to $154.2 million from $155.4 million reported in the prior-year quarter. The segment reported an adjusted profit of $13.5 million, up from $13.4 million in the year-ago quarter.
Financial Updates
The company reported cash and cash equivalents of $111.3 million at the end of the second quarter, down from the year-earlier quarter end’s balance of $181.2 million. The company utilized $129 million of cash in operations during the second quarter compared with $93 million in the prior-year quarter.
Business Updates
This June, Silgan announced the wrapping up of its two metal container manufacturing facilities in Mt. Vernon, MI and Waupun, WI. Both facilities are expected to be shut down during the fourth quarter this year. As a result, the company recognized pre-tax rationalization charges of $2.5 million during the reported quarter. These plant closures also mark the company’s complete withdrawal from the Central States Pension Fund. In the second quarter, the company recognized pre-tax rationalization charge of around $36.2 million for withdrawal liability.
Outlook
Silgan has maintained its adjusted earnings per share in the range of $2.10 to $2.20 for the ongoing year compared with the prior year’s $2.08. The guidance for 2019 includes an unfavorable non-cash pension impact of approximately 13 cents per share resulting from significant market declines in investment values at the end of 2018 that negatively impacted the assets held in the company’s pension plans.
Silgan provided adjusted earnings per share guidance of 73-78 cents for the third quarter of 2019 compared with earnings per share of 76 cents recorded in third-quarter 2018. The guidance includes an unfavorable non-cash pension impact of approximately 3 cents per share.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
At this time, Silgan has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Silgan has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.