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Bemis Touches 52-Week Low: What Weighed Upon the Stock?

Zacks Equity Research

Shares of Bemis Company, Inc. BMS touched a 52-week low of $43.60 on May 17, though it recovered to close the day at $43.75.

Bemis had posted negative earnings surprises of 10.77% in the first quarter of 2017. The company has an average negative earnings surprise of 1.93% in the past four quarters.

Shares of this global manufacturer of flexible packaging products and pressure sensitive materials that sells primarily to the food industry, have underperformed the Zacks categorized Containers-Paper/Plastic subindustry over the past one year. While Bemis' shares declined 7%, the sub industry witnessed a rise of 18.7% over the same timeframe.
 




Let’s Delve Deep

Bemis’ shares have dipped 2.0% since it reported first-quarter results on Apr 29. The company posted quarterly adjusted earnings per share of 58 cents, a 3.3% year-over-year drop, which fell short of the Zacks Consensus Estimate of 64 cents. Results were impacted by lower-than-expected unit volumes and operational issues in the U.S. Packaging segment. The company faced two key issues in the U.S. – volume call downs from several core customers as a result of softness in their businesses and disappointing operational execution.

During March, Bemis’ customers started to tune down their volume outlooks for the balance of the year owing to the decline in business volumes. The company had ramped up workforce and resources for customers and it had to bear the impact of the dip in customer volumes. The company has planned an aggressive manufacturing cost takeout program focused on waste reductions, productivity and material usage as well as substitutions. The company struggled to deliver on these plans. Waste was high in certain areas and Bemis also faced some unplanned downtime. Further, it didn't gain traction on the material usage and substitutions as per plans.

The company lowered 2017 adjusted earnings per share guidance range to $2.50–$2.60 from the previous $2.85–$3.00. This reflects lower volume expectations for U.S Packaging and the challenges in the operational execution in the U.S. Compared with the earnings per share of $2.69 in fiscal 2016, the mid-point of the guidance reflects a year-over-year decline of 5%.
 

Bemis Company, Inc. Price and Consensus

 

Bemis Company, Inc. Price and Consensus | Bemis Company, Inc. Quote

Bemis’ estimates have witnessed a downtrend in the last 30 days. The Zacks Consensus Estimate for 2017 and 2018 have both moved down 11% to $2.57 and $2.82, respectively.

Bemis currently carries a Zacks Rank #5 (Strong Sell).

Key Picks

Better-ranked stocks in the same industry include are AGCO Corporation AGCO, Caterpillar, Inc. CAT and Parker-Hannifin Corporation PH. All the three stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an average positive earnings surprise of 40.39% in the trailing four quarters. AGCO shares have gained 24.4% in the past one year. Caterpillar generated an average positive earnings surprise of 40.25% in the past four quarters. Parker-Hannifin has an average positive earnings surprise of 14.94% Caterpillar and Parker-Hannifin shares have yielded a return of 49.3% and 42.9% in the past one year, respectively.

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