Greif Downgraded to Strong Sell - Analyst Blog

By
A A A

On Dec 27, Zacks Investment Research downgraded Greif, Inc. ( GEF ), a provider of packaging services, to a Zacks Rank #5 (Strong Sell).

Why the Downgrade?

Although Greif's adjusted earnings improved 18.8% year over year to 76 cents per share in the fourth-quarter fiscal 2013 (ended Oct 31, 2013), it missed the Zacks Consensus Estimate of 80 cents.

Additionally, Greif reported free cash flow of $69.3 million in the quarter against $98.4 million a year ago. The decrease was due to lower cash from operating activities, higher capital expenditures and timberland purchases.

Greif expects the rigid industrial packaging business to be hurt by challenging market conditions due to the delayed agricultural season in Europe and North America. Its flexible products business will also be negatively impacted by risks from the new facilities.

For 2014, Grief expects capital expenditure of around $153 million, slightly higher than 2013. For the full year, the company will focus on safety in all its facilities and work-related activities, while modest sales volume improvement and slightly higher raw material costs will hurt top-line growth.

Moreover, foreign exchange volatility and social and political unrest remain headwinds for the upcoming quarters.

Following the fourth-quarter earnings announcement, Greif's Zacks Consensus Estimate for 2014 has gone down 10% to $3.13 per share. Likewise, the Zacks Consensus Estimate for 2015 dropped 6% to $3.73.

Other Stocks to Consider

Better-ranked stocks in the packaging industry include Sealed Air Corporation ( SEE ), Ball Corporation ( BLL ) and Silgan Holdings Inc. ( SLGN ). While Sealed Air sports a Zacks Rank #1 (Strong Buy), Ball Corporation and Silgan Holdings carry a Zacks Rank #2 (Buy).



BALL CORP (BLL): Free Stock Analysis Report

GREIF INC (GEF): Free Stock Analysis Report

SEALED AIR CORP (SEE): Free Stock Analysis Report

SILGAN HOLDINGS (SLGN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BLL , GEF , SEE , SLGN

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

95,922,227
  • $6.85 ▲ 15.32%
93,149,019
  • $11.6601 ▲ 10.73%
83,552,724
  • $3.425 ▲ 1.33%
70,881,814
  • $36.62 ▲ 2.72%
44,503,892
  • $40.16 ▲ 6.50%
38,055,088
  • $6.56 ▼ 1.94%
36,194,062
  • $15.375 ▼ 0.81%
34,530,413
  • $98.665 ▼ 0.36%
As of 7/29/2014, 03:03 PM