Sealed Air CorporationSEE is set to report second-quarter 2015 results before the opening bell on Jul 30. Last quarter it posted a positive surprise of 28.57%, the fourth straight quarter of earnings beat, with an average positive earnings surprise of 19.4%. Let's see how things are shaping up for this announcement.
Factors at Play
Sealed Air anticipates lower raw material costs to favorably impact margins. Moreover, the company's continued focus on adding new products, value added selling, operational discipline, and earnings quality improvement efforts will enhance its performance. Further, Sealed Air will also benefit from its cost saving programs.
Cheaper oil means lower gasoline prices, which will provide a cost tailwind. This, along with an improving employment scenario, will lead to a positive turn in consumer spending patterns. Consequent rise in packaging demand will facilitate Sealed Air's growth.
However, unfavorable foreign currency impact will continue to affect its earnings. Moreover, increased costs associated with Sealed Air's restructuring program will impact margins. A tough U.S. meat market also remains headwind. The company continues to invest in R&D, and sales and marketing. Even though these investments will drive future growth, they it will affect margins in the near term.
Our proven model does not conclusively show that Sealed Air is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Sealed Air has an ESP of -3.70%. That is because the Most Accurate estimate stands at 52 cents while the Zacks Consensus Estimate is pegged higher at 54 cents.
Zacks Rank : Sealed Air's Zacks Rank #2 (Buy), when combined with a negative ESP, makes surprise prediction difficult.
We caution against Sell-rated stocks (Zacks Ranks #4 and 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Berry Plastics Group, Inc. BERY has an earnings ESP of +7.84% and a Zacks Rank #3 (Hold). It is expected to report results on Jul 31.
Casella Waste Systems Inc. CWST has an earnings ESP of +150% and a Zacks Rank #3. It is expected to report results on Jul 29.
TASER International Inc. TASR has an earnings ESP of +22.22% and a Zacks Rank #3. It is expected to report its results on Jul 30.
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