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Bemis (BMS) Up 3.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Bemis (BMS). Shares have added about 3.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Bemis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Bemis Earnings Beat, Revenues Miss Estimates in Q1

Bemis reported first-quarter 2019 adjusted earnings per share of 67 cents, which improved 6% year over year. The bottom line also beat the Zacks Consensus Estimate of 66 cents.

Including one-time costs, Bemis reported earnings of 66 cents per share compared with 52 cents in the prior-year quarter.

Operational Update

Net sales were down 2.5% to $1,001 million from $1,027 million reported in the year-ago quarter. The figure missed the Zacks Consensus Estimate of $1,002 million.

Cost of products sold declined 3.6% year over year to $799 million in the January-March quarter. Gross profit rose 2% year over year to $202 million. Gross margin came in at 20.2% during the first quarter of 2019 compared with 19.3% in the year-ago quarter.

Selling, general and administrative expenses of $97 million from remained flat with the year-earlier quarter. Adjusted operating income increased 5% year over year to $95.4 million.

Segmental Performance

Net sales in the U.S. Packaging segment improved 0.4% year over year to $669 million. The segment’s operating profit rose 5% to $92 million from $87 million in the prior-year quarter.

Net sales in the Latin America Packaging segment declined around 16% year over year to $142 million. The segment’s operating profit improved 47% to $11.9 million from year-ago quarter’s figure of $8.0 million.

Net sales in the Rest of World Packaging segment were down 1% year over year to $190 million. This segment’s operating profit increased 22% to $20.1 million from $16.5 million in the prior-year quarter.

Financial Update

Bemis reported cash and cash equivalents of $57.7 million at the end of the first quarter of 2019, down from $76.1 million reported at the end of 2018. Cash flow from operations was $1.5 million in the first quarter of 2019, compared with $54.3 million recorded in comparable period last year.

Bemis’ net debt increased to $1.35 billion as of Mar 31, 2019, from $1.28 billion as of Dec 31, 2018.

Bemis & Amcor Merger

In August 2018, Amcor and Bemis announced the plan to merge their operations in an all-stock transaction worth $6.8 billion. The merger will create a global leader in consumer packaging. This merger will provide $180 million of cost synergies identified as part of the transaction.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Bemis has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Bemis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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