A month has gone by since the last earnings report for Sealed Air (SEE Quick QuoteSEE - Free Report) . Shares have added about 22.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.

Sealed Air Beats on Q1 Earnings, Suspends '20 View

Sealed Air reported first-quarter 2020 adjusted earnings per share of 73 cents, surpassing the Zacks Consensus Estimate of 59 cents. The bottom line also improved 24% year over year. The results can be attributed to strong execution of Reinvent SEE strategy, which was introduced in December 2018 to drive earnings growth and productivity improvements. Acquisitions, higher volumes and favorable price/cost spread also contributed to the results.

Including special items, the company reported net earnings per share of 74 cents compared with the prior-year quarter figure of 41 cents.

Total revenues of $1,174 million in the reported quarter were up 6% from the year-ago quarter figure. The top line beat the Zacks Consensus Estimate of $1,148 million. While currency negatively impacted sales by 3%, acquisitions contributed 7% to the same.

Cost and Margins

Cost of sales increased 5% year over year to $783 million. Gross profit improved 7% year over year to $391 million. Gross margin came in at 33.3% compared with 32.8% in the prior-year quarter.

SG&A expenses declined 8% to $194 million year over year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $253 million in the quarter compared with $216 million in the prior-year quarter. Adjusted EBITDA margin was 21.6% compared with 19.4% in the prior-year quarter, driven by the company’s Reinvent SEE initiatives, favorable price cost spread, higher volumes and acquisitions. This was partially offset by higher operating costs, lower volumes and unfavorable foreign currency impact.

Segment Performance

Food Care: Net sales rose 2% year over year to $690 million. Adjusted EBITDA improved 9% year over year to $156 million.

Product Care: The segment reported net sales of $484 million in the reported quarter, up 12% from the prior-year quarter. Adjusted EBITDA was up 24% year over year to $93 million.

Financial Updates

Cash and cash equivalents were $275 million as of Mar 31, 2020, up from $262 million as of Dec 31, 2019. Cash flow from operating activities was around $41 million in the reported quarter compared with $65 million in the prior-year quarter. Capital expenditures came in at $48.7 million in the reported quarter compared with $49.4 million in the prior-year quarter. As of Mar 31, 2020, Sealed Air’s net debt came in at $3.6 billion, flat compared with Dec 31, 2019.

Suspends Guidance

Sealed Air has suspended full-year 2020 guidance citing the uncertainty in the markets owing to the coronavirus pandemic.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.8% due to these changes.

VGM Scores

At this time, Sealed Air has a nice Growth Score of B, though it is lagging a bit 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 B. 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 these revisions indicates a downward shift. Notably, Sealed Air has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.