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Crown Holdings (CCK) Q4 Earnings In Line, Revenues Lag

Crown Holdings Inc.CCK reported fourth-quarter 2016 adjusted earnings per share of 71 cents, which came in line with the Zacks Consensus Estimate and inched up 1% year over year. On a reported basis, earnings came in at 47 cents per share, flat year over year.

Net sales in the quarter declined nearly 5% year over year to $1,923 million from $2,027 million in the year-ago quarter, primarily due to unfavorable currency translation and the pass through of lower material costs. Revenues lagged the Zacks Consensus Estimate of $1,980 million.

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Cost of products sold went down 6% year over year to $1,533 million. Gross profit edged down 2% to $390 million, with gross margin expanding 70 basis points (bps) to 20.3% in the quarter, both on a year-over-year basis.

Selling and administrative expenses declined 6% year over year to $93 million. Adjusted segment operating income improved 1% year over year to $238 million in the quarter. Operating margin expanded 70 bps to 12.4% from 11.6% in the year-ago quarter.

Segment Performance

Net sales from the Americas Beverage segment were $689 million, down 4% from $717 million in the year-ago quarter. Segment operating profit dipped 2% to $127 million from $130 million in the year-ago quarter.

The North-America Food segment's sales went down 1% year over year to $148 million. Operating earnings also fell 8% year over year to $12 million.

The European Beverage segment's sales dropped 6% year over year to $291 million. However, operating income declined 5% year over year to $39 million.

Revenues in the European Food segment were down 4% year over year to $396 million. Segment operating profit went down 6% to $32 million from $34 million in the year-ago quarter.

Revenues in the Asia-Pacific segment decreased 1% year over year to $277 million. Operating profit remained flat at $41 million in the reported quarter.

Crown Holdings, Inc. Price, Consensus and EPS Surprise

Crown Holdings, Inc. Price, Consensus and EPS Surprise | Crown Holdings, Inc. Quote

Financial Update

Crown Holdings had cash and cash equivalents of $559 million at the end of 2016 compared with $717 million at the end of the prior year. Cash flow from operations came in at $930 million in 2016 compared with $956 million in the prior year. Adjusted free cash flow was $479 million in 2016 with $602 million in the prior year. As of 2016 end, Crown Holdings' total debt fell to $4.9 billion from $5.5 billion as of 2015 end.

Crown Holdings announced that its Board of Directors has authorized the repurchase of an aggregate amount of $1 billion of its common stock through the end of 2019.

Fiscal 2016 Performance

Crown Holdings reported adjusted earnings per share of $3.93 in 2016, up 9% year over year beating the Zacks Consensus Estimate by a penny. Revenues were at $8.284 billion, down 5% year over year. Revenues also fell short of the Zacks Consensus Estimate of $8.341 billion.

Outlook

Crown Holdings expects adjusted diluted earnings per share in the range of $3.80-$4.00 in 2017 which includes a foreign currency translation headwind of approximately 12 cents per share. Adjusted diluted earnings per share for the first quarter are projected in the range of 65-75 cents compared to 69 cents in the prior year. These estimates reflect the impact of expected repurchase activity under the newly authorized share repurchase program.

In the past one year months, Crown Holdings has underperformed the Zacks categorized Containers- Metal/ Glass sub industry. In the said time frame, the company's shares have gained 12.8%, while the industry gained 22.4%.

Zacks Rank & Key Picks

Crown Holdings currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same space include ABB Ltd ABB , Altra Industrial Motion Corp. AIMC and Apogee Enterprises, Inc. APOG . All three of these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

ABB Ltd has a positive average earnings surprise of 23.5% in the last four quarters. Altra Industrial Motion generated a positive average earnings surprise of 8.06% in the trailing four quarters. Apogee has delivered an average positive earnings surprise of 13.24% in the last four quarters.

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


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

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