Markets

WestRock's (WRK) Earnings Beat Estimates in Q3, Down Y/Y

WestRock Company WRK delivered third-quarter fiscal 2020 (ended Jun 30, 2020) adjusted earnings of 76 cents per share, surpassing the Zacks Consensus Estimate of 44 cents. However, earnings plunged 31.5% from the prior-year quarter.

Including one-time items, the company reported earnings per share of 69 cents in the reported quarter, down 29.6% from the prior-year quarter.

Operational Update

WestRock’s total revenues slid 9.7% year over year to $4,236 million. Moreover, the revenue figure missed the Zacks Consensus Estimate of $4,357 million.

Cost of sales was down 6.3% year over year to $3,466 million in the fiscal third quarter. Gross profit declined 22.1% year over year to $770 million. Gross margin came in at 18% compared with the 21% reported in the prior-year period. Adjusted segment EBITDA was $708 million compared with the $858 million witnessed in the year-earlier quarter. Total segment income was around $323 million, down from the year-ago quarter’s $485 million.

WestRock Company Price, Consensus and EPS Surprise

WestRock Company Price, Consensus and EPS Surprise

WestRock Company price-consensus-eps-surprise-chart | WestRock Company Quote

Segmental Performance

Corrugated Packaging: Sales in the segment dipped 11.2% year over year to $2,729 million in the June-end quarter primarily on lower corrugated selling price/mix, lower volumes, and unfavorable impact of the coronavirus pandemic and foreign currency. Adjusted segment EBITDA decreased 25.2% year over year to $482 million.

Consumer Packaging: Sales in the segment were down 5.8% year over year to $1,553 million. This downside resulted from lower selling price/mix, dismal volumes, and unfavorable impact of the pandemic and foreign-currency translation. Adjusted segment EBITDA climbed 4.3% year over year to $243 million.

Financial Position

As of Jun 30, 2020, cash and cash equivalents were $292 million, significantly up from $152 million as of Sep 30, 2019. As of Jun 30, 2020, total debt was $10.1 billion, unchanged compared with total debt as of Sep 30, 2019. Cash flow from operations was $740 million during the fiscal third quarter compared with the year-earlier quarter’s $735 million. WestRock invested $244 million in capital expenditure and paid out $52 million in dividends in the reported quarter.

WestRock is focused on meeting customer demand and executing strategies for financial strength and substantial liquidity to counter the pandemic-related setbacks.

Price Performance

Shares of WestRock have gained 11% over the past three months, outperforming the industry’s growth of 8.6%.

Zacks Rank & Other Stocks to Consider

WestRock currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Harmony Gold Mining Company Limited HMY and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2, at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Equinox Gold has an expected earnings growth rate of 65.5% for 2020. The company’s shares have surged 96.8% in the past year.

Harmony Gold has an estimated earnings growth rate of 264.3% for fiscal 2020. Its shares have soared 154.4% in a year’s time.

Northern Dynasty has a projected earnings growth rate of 28.6% for the current year. The company’s shares have skyrocketed 285.5% over the past year.

Biggest Tech Breakthrough in a Generation

Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.

A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.

See 8 breakthrough stocks now>>


Click to get this free report

Harmony Gold Mining Company Limited (HMY): Free Stock Analysis Report

WestRock Company (WRK): Free Stock Analysis Report

Northern Dynasty Minerals, Ltd. (NAK): Free Stock Analysis Report

Equinox Gold Corp. (EQX): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More