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Sealed Air (SEE) to Report Q3 Earnings: Is a Beat in Store?

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Sealed Air Corporation (SEE - Free Report) is scheduled to report third-quarter 2019 results on Nov 6, before the opening bell.

The global leader in food safety and security as well as product protection has an impressive surprise history. Sealed Air’s earnings surpassed the Zacks Consensus Estimate in all of the trailing four quarters, the average being 10.53%.

Which Way Are Estimates Treading?

Let’s take a look at the estimate revision trend to get a clear picture of what analysts expect from the company prior to the earnings release.

The Zacks Consensus Estimate for third-quarter revenues is pegged at $1.24 billion, indicating a rise of 4.12% from the year-ago quarter’s reported figure. The same for earnings stands at 63 cents, suggesting 3.28% improvement from the prior-year quarter’s tally. Notably, the Zacks Consensus Estimate has remained stable in the past 30 days.

Sealed Air Corporation Price, Consensus and EPS Surprise

 

 

A Peek at Q2

Sealed Air’s second-quarter 2019 adjusted earnings per share of 80 cents surpassed the Zacks Consensus Estimate of 64 cents and also rose 25% year over year. The uptick can be attributed to strong execution of the company’s Reinvent SEE strategy which was introduced in December 2018 to drive growth and earnings. Total revenues inched up 1% year over year to $1,161 million, but missed the Zacks Consensus Estimate of $1,167 million.
 


 

Over the past year, shares of Sealed Air have gained 25.6% against the  industry’s decline of 25.0%. Will the upcoming quarterly results provide a boost to Sealed Air? Let’s take a look.

Key Factors to Consider

Higher demand for its core product portfolio, recently-introduced innovation and solid fresh food market, and the e-commerce sector are likely to have contributed to the company’s third-quarter revenues. Further, the company’s recent acquisitions, notably of Automated Packaging Systems and AFP, are likely to have benefitted the top line in the quarter to be reported.

In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program to drive growth and earnings. The strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. Savings from these initiatives are likely to have contributed to the operating margin and, in turn, are expected to have boosted the bottom line in the third quarter.

However, currency headwinds, input cost inflation and higher freight charges are likely to have impacted margins in the quarter ended on September. Moreover, as Sealed Air continued to invest in R&D, sales and marketing to drive future growth, the bottom line is expected to reflect the impact of higher R&D expenses in the to-be-reported quarter.

How Will the Segments Fare?

The Zacks Consensus Estimate for the Food Care segment’s third-quarter net sales is pegged at $737 million, which indicates year-over-year growth of 8%. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $155 million, suggesting year-over-year rise of 7%. Unfavorable currency movement is likely to have impacted Food Care results in the to-be-reported quarter.

The Zacks Consensus Estimate for the Product Care segment’s net sales is pegged at $496 million for the quarter, indicating year-over-year improvement of 8%. The Zacks Consensus Estimate for the segment’s EBITDA is $81 million, suggesting growth of 7% from $76 million reported in the prior-year quarter. Currency headwind and lower volume growth due to decelerating global industrial market and the trade dispute between the United States and China might have weighed on the segment’s results in the July-September quarter.

Earnings Whispers

Our proven model predicts an earnings beat for Sealed Air this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Sealed Air has an Earnings ESP of +2.40% as the Most Accurate Estimate is pegged at 64 cents, higher than the Zacks Consensus Estimate of 63 cents.

Zacks Rank: Sealed Air carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to Consider

Here are a few Industrial Products stocks which you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat in their upcoming releases:

Plug Power, Inc (PLUG - Free Report) has an Earnings ESP of +58.33% and currently carries a Zacks Rank of 2.

Welbilt, Inc (WBT - Free Report) has an Earnings ESP of +1.01% and holds a Zacks Rank of 3 at present.

Intellicheck Mobilisa, Inc (IDN - Free Report) , another Zacks #3 Ranked stock, has an Earnings ESP of +33.33%.

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