Silgan Holdings Inc.
) is set to report third quarter 2013 results on Oct 23. The
packaging company had delivered a negative earnings surprise of
3.08% in the second quarter. Let's see how things are shaping up
for this announcement.
Growth Factors This Past Quarter
Silgan Holdings posted adjusted earnings of 63 cents per share in
the second quarter, up 15% year over year driven by solid
operating performance by the metal and plastic container
businesses. Earnings missed the Zacks Consensus Estimate of 65
cents. However, revenues increased 7% year over year to $880
million and surpassed the Zacks Consensus Estimate of $862
million. Sales increased at the metal food container and plastic
container businesses, partly offset by lower sales in the
closures business. This packaging company has delivered a
negative earnings surprise in three of the past four quarters,
with an average of -2.02%.
Silgan's metal can and closure businesses were negatively
affected in the second quarter by economic uncertainty caused by
the ongoing political instability in the Middle East and
Venezuela. Thus, Silgan trimmed its fiscal 2013 guidance for
adjusted earnings per share to $3.00 to $3.15 from the previous
range of $3.05 to $3.20. For the third quarter, adjusted earnings
per share are expected to range from $1.25 to $1.35, based on the
normal but slightly delayed distribution of fruit and vegetable
pack season. However, political volatility in various
international regions could hurt earnings.
Our proven model does not conclusively show that Silgan will beat
earnings this quarter. That is because a stock needs to have both
a positive Earnings ESP and a Zacks Rank #1, #2 or #3 for this to
happen. That is not the case here as you will see below.
Negative Zacks ESP
: The Most Accurate estimate stands at $1.29 while the
Zacks Consensus Estimate is higher at $1.32. That is a difference
: Silgan Holdings' Zacks Rank #3 (Hold) lowers the predictive
power of ESP because the Zacks Rank #3 when combined with a
negative ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Packaging Corporation of America
), Earnings ESP of +1.18% and Zacks Rank #2 (Buy).
), Earnings ESP of +0.80% and Zacks Rank #3 (Hold).
KapStone Paper and Packaging Corporation
), Earnings ESP of +7.06% and Zacks Rank #3 (Hold).
KAPSTONE PAPER (KS): Free Stock Analysis
PACKAGING CORP (PKG): Free Stock Analysis
SILGAN HOLDINGS (SLGN): Free Stock Analysis
DOMTAR CORP (UFS): Free Stock Analysis Report
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