On Jun 10, Zacks Investment Research downgraded
), a provider of packaging services, to a Zacks Rank #5 (Strong
Why the Downgrade?
Greif's estimates witnessed sharp downward revisions following its
second-quarter fiscal 2014 (ended Apr 30, 2014) results on Jun 4.
Adjusted earnings declined 17% year over year to 57 cents per
share, due to disrupted production at its flexible products
manufacturing facility in Turkey. Results also fell short of the
Zacks Consensus Estimate of 68 cents per share.
The decline in earnings was not a surprise and came in line with
Greif's previous announcement that second-quarter earnings would be
adversely affected by production disorder caused by protestors
occupying the facility in Hadimkoy, Turkey for 60 days. The company
had also revealed that inclement weather will likely weigh on the
Paper Packaging and Rigid Industrial Packaging segments. These
factors had a negative impact of approximately $20 million on
For fiscal 2014, Greif trimmed its earnings before interest, taxes,
depreciation and amortization (EBITDA) guidance to the range of
$475 million to $505 million from the previous band of $490 million
to $540 million. Excluding timberland gains of around $20 million
or 20 cents per share, earnings per share were also lowered to a
new band of $2.48 to $2.80 from the earler $2.60 to $3.15.
Greif anticipates a gradual global economic recovery during fiscal
2014, which should result in moderate sales and volume improvement,
along with slightly higher raw material costs. The company expects
that the Rigid Industrial Packaging segment will however benefit
from moderate volume growth, especially in Europe.
Following the earnings announcement, in the past 7 days, 2 of the 3
estimates available for 2014 were revised downward while for 2015,
2 of the 6 estimates were revised downward. The Zacks Consensus
Estimate for 2014 fell 8% to $2.78 per share. Likewise, the Zacks
Consensus Estimate for 2015 moved south 1% to $3.48.
Other Stocks to Consider
Investors interested in this sector could consider stocks like
Crown Holdings Inc.
Proto Labs, Inc.
Graphic Packaging Holding Company
). While Crown Holdings and Proto Labs sport a Zacks Rank #1
(Strong Buy), Graphic Packaging has a Zacks Rank #2 (Buy).
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CROWN HLDGS INC (CCK): Free Stock Analysis
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GREIF INC (GEF): Free Stock Analysis Report
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