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Greif (GEF) Hikes CRB & URB Prices to Counter Rising Costs

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Greif, Inc. GEF announced  that it is implementing a $50 per ton price increase for all grades of uncoated recycled paperboard (URB) and all grades of coated recycled paperboard (CRB). Both price increases are being implemented to counter cost pressure in labor, recycled fiber, transportation, chemicals used in production and other recycled paperboard input materials, and supply-demand balance.

The price hike on URB will come in effect on shipments beginning May 18, 2020. The price increase for all grades of CRB will be effective on shipments beginning May 13, 2020.

The company also provided an update regarding its actions amid the COVID-19 pandemic. Considering that Greif is engaged in the packaging and protection of critical goods and materials that serve the needs of communities globally, the company has been identified as an essential business. Thus, it continues to operate all of its production facilities in more than 40 countries.  Meanwhile, the company is taking all necessary steps to ensure the safety of its employees. This includes enhancing cleaning and sanitation protocols throughout facilities and offices, social distancing practices, and encouraging working from home wherever possible.

Recently, another player in the Zacks Containers - Paper and Packaging  industry, Sonoco Products Company SON also announced that it is implementing a price hike of a minimum of 8% for all paperboard tubes and cores, and a $50 per ton price increase for all grades of URB in the United States and Canada. The price hike will be effective on shipments beginning May 13. Per the company, the hike was necessary to recoup rising costs.

Apart from rising costs, Greif continues to face challenging industrial markets across its portfolio and the overall demand environment remains soft. The company expects adjusted earnings per share for fiscal 2020 at $3.55-$3.91. The mid-point of the range depicts a decline of 4% thanks to the macroeconomic uncertainty and the impact of the coronavirus outbreak.

However, Greif will benefit from its focus on operational execution, capital discipline, and cost-reductions to counter softer market demand. The Caraustar acquisition also bolstered margins and strengthened the company’s dominant position in industrial packaging.
 

Greif’s shares have lost 20.2% in the past year compared with the industry’s decline of 44.7%.

Zacks Rank and Stocks to Consider

Currently, Greif carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp. SMED and Lakeland Industries, Inc. LAKE. While Sharps Compliance sports a Zacks Rank #1 (Strong Buy), Lakeland Industries carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Sharps Compliance has an estimated earnings growth rate of 800% for 2020. In a year, the company’s shares have gained 114%.

Lakeland Industrieshas an estimated earnings growth rate of 73% for the current fiscal. In a year, the company’s shares have gained 34%.

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