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Greif (GEF) to Report Q2 Earnings: What's in the Offing?

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Greif, Inc. GEF is scheduled to release second-quarter fiscal 2020 financial numbers, after the bell on Jun 3.

Greif outpaced the Zacks Consensus Estimate in all of the trailing four quarters, the average positive beat being 11.03%.

Share-Price Performance

Greif’s shares have lost 1.1% in the past year compared with the industry’s decline of 33.2%.

Where are Q2 Estimates Heading?

The Zacks Consensus Estimate for the company’s earnings is pegged at 81 cents for the fiscal second quarter, flat year on year. We note that the consensus estimate has remained unchanged over the past 30 days.

The Zacks Consensus Estimate for total revenues for the quarter under review is pegged at $1.18 billion, reflecting a 2.1% decline from the year-ago quarter’s reported number.

Key Factors

Greif is poised to gain from its focus on operational execution, cost-reduction activities, and wide range of industrial packaging product portfolio. These factors are likely to have contributed to the fiscal second-quarter performance. Further, the company’s efforts to reduce costs to counter the softer market demand might have boosted margins during this period. However, prevalent macroeconomic uncertainties and the unfavorable impact of the coronavirus outbreak on the company’s global operations are concerns.

The Rigid Industrial Packaging & Services segment has been battling weak demand due to the deteriorating industrial-manufacturing environment. Volume weakness is pronounced in West and Central Europe, the Asia-Pacific region and the United States due to trade uncertainties and the coronavirus outbreak. This is likely to have eroded the segment’s performance in the fiscal second quarter. Volatile currency-exchange rates are also likely to have impacted the segment’s bottom-line performance. The Zacks Consensus Estimate for the segment’s sales is pegged at $622 billion for the to-be-reported quarter, suggesting a 1.6% dip from the year-ago reported figure.

Last February, the company completed the acquisition of Caraustar Industries, Inc. and is currently integrating its operations. The buyout has reinforced the company’s leadership in industrial packaging, and significantly its bolstered margins, free cash flow and profitability.

The company’s Paper Packaging segment is likely to have benefited from the Caraustar acquisition and various new capital growth projects in the fiscal second quarter. Given the coronavirus pandemic-related crisis, increased packaging demand for food and grocery products, corrugated containers and other corrugated products might have contributed to the segment’s performance. However, a soft economic condition and mix erosion in the segment might have been deterrents. The Zacks Consensus Estimate for net sales of the segment is currently pegged at $525 million for the quarter to be reported, suggesting year-over-year growth of 5.4%.

The Zacks Consensus Estimate for the Flexible Products & Services segment’s revenues is pegged at $71 million, suggesting a 7.8% fall from the $77 million recorded in the prior-year quarter. Prevalent weak demand in Western Europe is a concern.

The Zacks Consensus Estimate for the Land Management segment’s revenues is pinned at $7 million, down from the $7.10 million witnessed in the year-ago quarter.

Greif, Inc. Price and EPS Surprise

Greif, Inc. Price and EPS Surprise
Greif, Inc. Price and EPS Surprise

Greif, Inc. price-eps-surprise | Greif, Inc. Quote

Earnings Whispers

Our proven model doesn’t conclusively predict an earnings beat for Greif this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Greif is 0.00%.

Zacks Rank: Greif currently carries a Zacks Rank of 3.

Stocks Worth a Look

Here are some stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Alcoa Corporation AA has an Earnings ESP of +13.04% and holds a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Accenture plc ACN has an Earnings ESP of +0.65% and carries a Zacks Rank #3, currently.

Allegiance Bancshares, Inc. ABTX has an Earnings ESP of +34.29% and is currently a Zacks #3 Ranked stock.

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