On Aug 19, Zacks Investment Research downgraded
), manufacturer of consumer packaging products, to a Zacks Rank #5
Why the Downgrade?
Rock-Tenn has witnessed sharp downward estimate revisions after
reporting third-quarter fiscal 2014 (ended Jun 30, 2014) results on
Jul 29. Adjusted earnings declined around 9% year over year to
$1.97 per share.
Shipments at the Corrugated Packaging segment of 1,962,000 tons
increased around 2.1% or 40,000 tons from the year-ago quarter.
However, the Consumer Packaging segment's paperboard and pulp
shipments decreased about 0.5% or 2,000 tons year over year to
Rock-Tenn guided fiscal fourth quarter adjusted earnings in the
range of $1.00 to $1.10 per share. For the fiscal fourth quarter,
Rock-Tenn expects the recovered fiber market to experience a
moderate rise in pricing.
Rock-Tenn expects volumes increment, investment in box plants
and the acquisition of Simpson Tacoma Kraft Paper Mill to aid sales
growth. However, benefits from the improving sales environment will
be offset by the estimated higher costs of recycled fiber, freight
Following the third-quarter earnings announcement, the Zacks
Consensus Estimate for fiscal 2014 has gone down 1% to $7.05 per
share. Likewise, the Zacks Consensus Estimate for fiscal 2015 fell
6% to $8.16 per share.
Other Stocks to Consider
Better-ranked stocks in the paper and packaging industry include
Mercer International Inc. (
), Neenah Paper, Inc. (
) and Orchids Paper Products Company (
). All these stocks carrry a Zacks Rank #2 (Buy).
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