Rock-Tenn Upgraded to Strong Buy - Analyst Blog

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On Jul 20, Zacks Investment Research upgraded Rock-Tenn Company ( RKT ), the Norcross, Ga.-based paperboard and packaging company, to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Rock-Tenn is expected to report an earnings beat in fiscal third quarter with an earnings ESP of +1.81%, following an 9.8% earnings surprise in the previous quarter. The third-quarter results are scheduled to be announced on Jul 23. Shares of Rock-Tenn reached a new 52-week high of $108.97 on Jul 11, exceeding the previous high of $108.

In the second quarter, Rock-Tenn reported earnings per share of $1.12, up 15% year over year driven by strong operating performance.

Rock-Tenn raised its cash flow guidance to a new range of $10 to $10.50 per share, indicating increased demand for folding carton and paper for fiscal 2013.  The company also hiked its quarterly dividend by 33% from 22.5 cents per share to 30 cents per share.

Rock-Tenn expects initial cash flow for fiscal 2014 in the band of $10.50 to $11.50 per share, based on expected recovery in containerboard and related box prices.

RockTenn's strong earnings growth reflects continued improvements in its operating performance and higher containerboard and box pricing. Rock-Tenn's investment in box plants, installation of new standard corrugated box operating system and increase in domestic and export pricing will help to improve its profitability.

Following the second quarter results, over the past 90 days, the Zacks Consensus Estimate for Rock-Tenn has gone up 2% to $6.53, reflecting a 45.85% year-over-year increase. The Zacks Consensus Estimate for 2014 edged up 2% to $9.15.

Other Stocks to Consider

Other stocks with favorable Zacks Rank in the same industry are KapStone Paper and Packaging Corporation ( KS ) with a Zacks Rank #1 (Strong Buy), and Orchids Paper Products Company ( TIS ) and Resolute Forest Products Inc. ( RFP ), both carrying a Zacks Rank #2 (Buy).



KAPSTONE PAPER (KS): Free Stock Analysis Report

RESOLUTE FOREST (RFP): Free Stock Analysis Report

ROCK-TENN CO (RKT): Free Stock Analysis Report

ORCHIDS PAPER (TIS): Free Stock Analysis Report

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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: KS , RFP , RKT , TIS

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