WestRock (WRK) to Report Q2 Earnings: What's in the Offing?

WestRock Company WRK is scheduled to report second-quarter fiscal 2024 results (ended Mar 31, 2024) on May 02, before the opening bell.

Q2 Estimates

The Zacks Consensus Estimate for WRK’s fiscal second-quarter revenues is pegged at $4.78 billion, suggesting a fall of 9.5% from the year-ago quarter's reported figure. The same for earnings per share is pegged at 25 cents, indicating a year-over-year decline of 67.5%. The consensus mark for the company’s fiscal second-quarter earnings has moved down 9% in the past 60 days.

WestRock Company Price and EPS Surprise

 

WestRock Company Price and EPS Surprise

WestRock Company price-eps-surprise | WestRock Company Quote

Q1 Performance

In the last reported quarter, WestRock registered year-over-year declines in adjusted earnings per share and revenues. Both earnings and revenues missed the consensus estimate.

WRK’s earnings have surpassed the Zacks Consensus Estimate in three of the last four trailing quarters, while falling short in one quarter, delivering an earnings surprise of 23.5%, on average.

Key Factors to Note

WestRock has been witnessing a slowdown in volumes in the Corrugated Packaging segment over the past few quarters. This has mainly been led by muted customer spending due to the inflationary scenario. Customers have also been rebalancing their inventory destocking.

Despite this overall weakness, the demand for corrugated packaging and containerboard for the packaging of essential items, such as food, beverages and medicines, is likely to have been stable. However, the company has been facing labor shortages and supply-chain issues, which are expected to have impacted shipments to customers. Each of these factors is likely to get reflected in the company’s top-line results for the second quarter of fiscal 2024.

While some costs were expected to have been favorable sequentially (natural gas, virgin fiber, chemicals and freight), some are likely to have been higher than last year’s comparable quarter. Higher recycled fiber costs are also likely to have hurt the margins.

Pricing actions and productivity initiatives undertaken by the company are likely to have negated some of these headwinds and benefited its fiscal second-quarter performance.

Segmental Projections

The Zacks Consensus Estimate for WRK’s Consumer Packaging segment’s quarterly revenues is pegged at $1.18 billion, suggesting a 15% drop from the prior-year period's reported figure. The segment’s adjusted EBITDA is estimated at $119 million.

For the Corrugated Packaging segment’s revenues, the consensus estimate is pinned at $2.45 million, implying growth of 1.1% from the year-ago quarter's reported number. The segment’s adjusted EBITDA is projected at $100 million.
The revenue estimate for the Paper segment is pegged at $982 million, suggesting a decline of 20.2% from the prior-year reported figure. The same for the Distribution segment is pinned at $303 million, indicating a 7.1% year-over-year decline.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for WestRock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.

Earnings ESP: The Earnings ESP for WestRock is -3.03%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Zacks Rank: WRK currently has a Zacks Rank #4 (Sell).

Price Performance

WestRock’s shares have gained 62.1% over the past year compared with the industry’s 37% growth.

 

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Image Source: Zacks Investment Research

 

Stocks to Consider

Here are some stocks with the right combination of elements to post an earnings beat in their upcoming releases.

Ingevity Corporation NGVT, scheduled to release first-quarter 2024 earnings on May 01, has an Earnings ESP of +39.29% and presently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for NGVT’s first-quarter earnings is pegged at 37 cents per share. It has an average trailing four-quarter earnings surprise of 61.8%.

Innospec Inc. IOSP, scheduled to release first-quarter earnings on May 9, has an Earnings ESP of +2.44%. It currently carries a Zacks Rank #2.

The Zacks Consensus Estimate for IOSP’s quarterly earnings is pegged at $1.64 per share. It has an average trailing four-quarter earnings surprise of 10.5%.

DuPont de Nemours, Inc. DD, scheduled to release first-quarter earnings on May 1, has an Earnings ESP of +0.39%. It carries a Zacks Rank #3 at present.

The Zacks Consensus Estimate for DD's earnings for the first quarter is pegged at 65 cents. It has an average trailing four-quarter earnings surprise of 4.5%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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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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