WestRock Company WRK , a provider of paper and packaging solutions, is set to report second-quarter fiscal 2017 results on Apr 26.
Last quarter, the company posted a positive surprise of 2.17%.
In fact, it delivered earnings surprises in each of the last four quarters, with an average beat of 9.84%. Westrock Company Price and EPS Surprise
Westrock Company Price and EPS Surprise | Westrock Company Quote
Let's see how things are shaping up prior to this announcement.
Our proven model does not conclusively show that WestRock will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: WestRock's Earnings ESP is +0.00% as the Most Accurate estimate of 47 cents is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Zacks Rank: Though WestRock's Zacks Rank #3 increases the predictive power of ESP, the ESP of 0.00% makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Factors at Play
For the second quarter, WestRock expects adjusted earnings per share to be sequentially higher than the first quarter. The company expects a benefit in the range of $50 million to $60 million of EBITDA across volume, price and mix from seasonally higher volumes in both consumer and corrugated as well as four more box shipping days and less maintenance downtime.
WestRock estimates $45 million to $60 million increase in input costs sequentially in fiscal second-quarter 2017. This also includes wage inflation as the first-calendar quarter normally includes annual wage increases taking effect for much of its workforce along with the restart of payroll taxes. The sale of the Home, Health & Beauty business in the second quarter will have an approximately $0.01 impact on sequential after-tax earnings.
Price/mix pressure also continues to be a headwind for WestRock due to the industry oversupply in both containerboard and boxboard. The company's largest foreign currency exposure is to the euro and the Brazilian real. As the dollar has strengthened against these currencies, the company estimates to face a negative impact to earnings before taxes, on an annual basis.
Share Price Performance
In the past three months, shares of WestRock have outperformed the Zacks classified Paper & Paper Products sub-industry. The stock gained 2.0% compared with the 4.4% dip registered by the industry.
Stocks That Warrant a Look
Here are some stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:
Methanex Corporation MEOH has an Earnings ESP of +13.04% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
United States Steel Corporation X has an Earnings ESP of +14.71% and also sports a Zacks Rank #1.
Albemarle Corporation ALB has an Earnings ESP of +2.11% and a Zacks Rank #2.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Methanex Corporation (MEOH): Free Stock Analysis Report Albemarle Corporation (ALB): Free Stock Analysis Report Westrock Company (WRK): Free Stock Analysis Report United States Steel Corporation (X): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research