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WestRock Slips to 52-Week Low; What's Taking it Down?

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Shares of WestRock CompanyWRK touched a 52-week low of $47.65 on Nov 16, before closing trade a notch higher at $47.93. Year-to-date, shares of the company have delivered a negative return of over 24%.

What Led to the Drop?

WestRock's sales and income in the fourth quarter of fiscal 2015 were negatively impacted by unfavorable foreign currency translation. Income was also hurt by merger-related depreciation, depletion and an increase in amortization expenses. The company expects the charges to continually to affect its performance in the future.

Notably, WestRock's largest foreign currency exposure is to the euro and the Brazilian real. As the dollar has strengthened against these currencies, the company estimates this to have a negative impact on its earnings before taxes, on an annual basis.

In the Merchandising Displays business of the Consumer Packaging segment, industry demand for promotional displays is soft owing to a number of factors, including the shift to clean floor policy of a major retailer. The company is working to match its cost structure to its anticipated levels of business through certain actions, of which one is streamlining its operations. WestRock has also announced the closure of its facilities in Tullahoma, TN; Chattanooga, TN; and Lima, OH.

WestRock operates in the highly cyclical pulp, containerboard and paperboard products industries. Moreover, unexpected fluctuations in prices of or demand for the company's products can put pressure on profit margins, lower sales volume, and pose risk to the company's estimates.

These bearish factors have triggered a downward tendency in the company's estimates in the past 30 days. In fact, the Zacks Consensus Estimate for fiscal 2016 decreased nearly 7.9% to $3.63 per share and for fiscal 2017 the same reduced 9.7% to $4.38 per share.

WestRock carries a Zacks Rank #5 (Strong Sell).

Stocks That Warrant a Look

Some better-ranked stocks in the sector include Sappi Ltd. SPPJY , Stora Enso Oyj SEOAY and Svenska Cellulosa Aktiebolaget SCA SVCBY . All of these stocks carry a Zacks Rank #2 (Buy).

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WESTROCK CO (WRK): Free Stock Analysis Report

SVENSKA CELLULS (SVCBY): Free Stock Analysis Report

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SAPPI LTD -ADR (SPPJY): Free Stock Analysis Report

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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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