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Credit Suisse Reduced WestRock’s Price Target to $48 per Share

Gabriel Kane

Yesterday’s Consumer Drops: WRK, SNE, LEG, and JCI

(Continued from Prior Part)

Price movement 

WestRock (WRK) has a market cap of $9.6 billion. It fell by 4.2% and closed at $37.97 per share on May 17, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -10.5%, -1.7%, and -15.0%, respectively, as of the same day. This means that WestRock is trading 6.7% below its 20-day moving average, 2.3% below its 50-day moving average, and 16.0% below its 200-day moving average.

Related ETF and peers

The iShares Global Timber & Forestry ETF (WOOD) invests 3.1% of its holdings in WestRock. WOOD tracks the 25 largest publicly listed companies that own or manage forests and timberlands. WOOD’s YTD price movement was -1.4% as of May 17, 2016.

The market caps of WestRock’s competitors are as follows:

  • International Paper Company (IP) – $17.2 billion
  • Packaging Corporation of America (PKG) – $6.2 billion
  • Graphic Packaging Holding Company (GPK) – $4.3 billion

Credit Suisse reduced WestRock’s price target

Credit Suisse reduced WestRock’s price target to $48 from $52 per share. It also rated the stock as “outperform.”

TheStreet Ratings rated WestRock as “hold” with a score of “C.”

WestRock separated its business

WestRock completed the separation of its specialty chemical business—Ingevity (NGVT). The company’s shareholders received one common share of Ingevity for six common shares of WestRock held at the close of business on May 4, 2016. Its shareholders received cash in lieu of fractional Ingevity shares.

Performance in fiscal 2Q16

WestRock reported fiscal 2Q16 net sales of $3.7 billion—a rise of 50.5% compared to net sales of $2.5 billion in fiscal 2Q15. Sales from the corrugated packaging and consumer packaging segments rose by 7.4% and 128.6%, respectively, in fiscal 2Q16—compared to the same period last year. It reported sales of specialty chemicals and land and development of $2.0 million and $18.7 million, respectively, in fiscal 2Q16. The company reported restructuring and other costs of $1.3 billion in fiscal 2Q16—compared to $17.2 million in fiscal 2Q15.

Its net income and EPS (earnings per share) fell to $56.9 million and $0.22, respectively, in fiscal 2Q16—compared to $1.1 billion and $0.77, respectively, in fiscal 2Q15. The company reported adjusted EPS of $0.61 in fiscal 2Q16.

WestRock’s cash and cash equivalents and inventories rose by 61.0% and 4.9%, respectively, in fiscal 2Q16—compared to fiscal 4Q15. Its current ratio fell to 1.7x and its DE (debt-to-equity) ratio rose to 1.3x in fiscal 2Q16—compared to a current ratio and a DE ratio of 1.9x and 1.2x, respectively, in fiscal 4Q15.

In the next part, we’ll look at Sony.

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