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Sealed Air (SEE) to Report Q2 Earnings: What's in the Cards?

Sealed Air Corporation SEE is scheduled to report second-quarter 2020 results on Aug 6, before the opening bell.

Q2 Estimates

The Zacks Consensus Estimate for quarterly revenues is pegged at $1.07 billion, indicating a year-over-year decline of 7.3%. The same for earnings stands at 54 cents, suggesting a year–over-year plunge of 32.5%.

The Zacks Consensus Estimate for earnings has moved south in the past 30 days. The company beat estimates in all of the trailing four quarters by 13.93%, on average.

A Sneak Peek at Q1

Sealed Air’s first-quarter adjusted earnings per share of 73 cents improved 24%, year over year. Total revenues increased 6% year over year to $1,174 billion. The company beat the Zacks Consensus Estimate on both counts.

Price Performance

Over the past three months, shares of Sealed Air have gained 31.1%, outperforming the industry’s growth of 12.4%.

Key Factors

Sealed Air is likely to have benefited in the second quarter from elevated demand for packaging of food, beverage and healthcare products, as well as the e-commerce boom amid the stay-at-home customers owing to the coronavirus-induced crisis. Notably, 65% of the company’s revenues come in from the packaging of protein, foods, fluids and goods for the medical and life-sciences industries, while e-commerce sales contribute around 13%. Further, gains from the company’s acquisitions, including Automated Packaging Systems and AFP, are likely to get reflected in the June-end quarter results.

In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program to drive growth and earnings. The strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. Savings from these initiatives are likely to have contributed to the operating margin and thus, are expected to get reflected on the second-quarter results. Moreover, solid demand for its core product portfolio, new innovations, strong fresh food markets and e-commerce sector might have benefited the company’s revenues during the April-June period.

However, slowdown in the global industrial market, weak demand in end markets and overall impact of the coronavirus pandemic might have dented the company’s quarterly performance.

Segment Estimates

The Zacks Consensus Estimate for the Food Care segment’s second-quarter net sales is pegged at $639 million, indicating a decrease of 10.1%, year on year. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $158 million, suggesting growth 1.3% from the prior-year quarter. Part of the Food Care segment, which includes food services and restaurants, might have been adversely impacted by slowdown in the food services industry amid the pandemic.

The Zacks Consensus Estimate for the Product Care segment’s net sales is pegged at $434 million for the June-end quarter, indicating a year-over-year decline of 3.6%. The Zacks Consensus Estimate for the segment’s adjusted EBITDA is $70 million, calling for a fall of 16.7% from the year-ago quarter.

The company’s traditional packaging solutions, which include Bubble Wrap, standardized mailers, shrink film and void fill, generate around one-third of the Product Care segment’s sales. This part of the segment is bearing the brunt of the market’s shift to automation and the global industrial manufacturing slowdown. Moreover, specialty industrial applications, which include the Instapak platform and integrated fabrication solutions, account for another one-third of Product Care sales, also remain weak, thanks to the bleak industrial demand and the long-standing U.S.-China trade tiff. Therefore, product care volume might have declined in the soon-to-be-reported quarter.

Sealed Air Corporation Price and EPS Surprise

Sealed Air Corporation Price and EPS Surprise

Sealed Air Corporation price-eps-surprise | Sealed Air Corporation Quote

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Sealed Air this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. But that’s not the case here.

Earnings ESP: Sealed Air has an Earnings ESP of -3.11%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Currently, Sealed Air carries a Zacks Rank #3.

Stocks Poised to Beat Earnings Estimates

Here are a few Industrial Products stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

TriMas Corporation TRS has an Earnings ESP of +12.50% and sports a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Regal Beloit Corporation RBC has an Earnings ESP of +9.23% and currently carries a Zacks Rank of 2.

AptarGroup, Inc. ATR has an Earnings ESP of +12.47% and carries a Zacks Rank #3, at present.

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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.

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