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What's in Store for WestRock (WRK) this Earnings Season?

WestRock CompanyWRK , a provider of paper and packaging solutions, is set to report first-quarter fiscal 2017 results on Jan 26. Last quarter, the company posted a positive surprise of 14.52%. In fact, it delivered earnings surprises in each of the last four quarters, with an average beat of 9.73%.

Let's see how things are shaping up for this announcement.

WestRock Co. Price and Consensus

WestRock Co. Price and Consensus | WestRock Co. Quote

Factors at Play

In the fiscal first quarter, WestRock expects earnings to decrease sequentially, in line with the seasonal pattern experienced last year. Price and mix will likely be negative as the impact of the previously announced corrugated price increase will be countered by the flow-through of the earlier published consumer price decreases.

Further, the fiscal first quarter is typically the heaviest maintenance period for the company. In fact, the company is planning 160,000 tons of downtime. Volumes will likely decline due to four less shipping days in the container business. Additionally, consumer grades are prone to seasonal weakness in the fiscal first quarter. Inflation of input prices and Hurricane Matthew are also likely to have a negative impact of approximately $15-$20 million.

Moreover, price/mix pressure continues to be a headwind for WestRock due to the oversupply of both containerboard and boxboard.

Share Price Performance

In the last one year, shares of WestRock have outperformed the Zacks classified Paper & Paper Products sub-industry. The stock gained 62.6% compared with the 45.9% increase registered by the industry over the same time frame.

Earnings Whispers

Our proven model does not conclusively show that WestRock will beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Most Accurate estimate is pegged at 42 cents while the Zacks Consensus Estimate stands at 45 cents. Hence, the difference is -6.67%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: WestRock's Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

Here are some stocks that you may want to consider as our model shows these have the right combination of elements to post a positive earnings surprise:

Methanex Corporation MEOH has an Earnings ESP of +53.33% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.

Albemarle Corporation ALB has an Earnings ESP of +2.67% and a Zacks Rank #2.

Avino Silver & Gold Mines Ltd. ASM has an Earnings ESP of +25.00% and a Zacks Rank #2.

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Methanex Corp. (MEOH): Free Stock Analysis Report

Albemarle Corp. (ALB): Free Stock Analysis Report

AVINO SILVER&GD (ASM): Free Stock Analysis Report

WestRock Co. (WRK): 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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