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Greif (GEF) Shares Rise 2% on Upbeat Fiscal Q2 Guidance

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Greif, Inc. GEF shares gained 2% as it raised second-quarter fiscal 2021 outlook on stronger-than-anticipated volumes and selling prices in the Global Industrial Packaging business, and a slightly lower-than-anticipated tax rate. The company now expects adjusted earnings per share in the quarter between $1.11 and $1.15. The mid-point of the revised guidance indicates a year-over-year growth of 19%. This is higher than the company's previous guidance range of 96 cents to $1.06 per share.

The company is slated to report second-quarter fiscal 2021 financial results after the market closes on Jun 9, 2021. The Zacks Consensus Estimate for earnings for the quarter is currently pegged at $1.00, indicating year-over-year growth of 5.3%. The consensus mark for revenues stands at $1.21 billion, suggesting growth of 4.5% from $1.16 billion in the year-ago quarter.

Greif has surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed once. The company has trailing four-quarter earnings surprise of 9.9%, on average.

Greif has been witnessing increase in demand in food, pharmaceutical and household goods industries owing to the COVID-19 pandemic. The company is seeing broad-based improvement in several of its key end markets. The industrial sector has been witnessing a pickup in activity over the past few months on gradual resumption of the global economic activities and reopening of businesses. Sales to lubricant and bulk chemical customers have been high courtesy of enhanced auto demand and generally improving industrial conditions worldwide. Tanks and coating sales were up due to better auto and construction demand, while sales to pharma and personal care markets remain robust. This is likely to reflect on second-quarter fiscal 2021 top line.

In Paper Packaging segment, the company recently announced price increases for containerboard and uncoated recycled boxboard grades in response to strong demand and mitigate the impact of cost inflation. It will continue to benefit from focus on operational execution, capital discipline, and a strong and diverse product portfolio. Its restructuring actions will also lead to savings. All these factors will reflect on the quarter’s earnings. However, increasing raw material costs and higher-than-anticipated SG&A expense primarily due to higher incentive accruals will offset some of these benefits.

Price Performance

The leading global producer of industrial packaging products has soared 102.6% in the past year, outperforming the industry’s rally of 50%.

Zacks Rank & Stocks to Consider

Greif currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Industrial Products sector include AGCO Corporation AGCO, Avery Dennison Corporation AVY and Caterpillar Inc. CAT. All of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AGCO Corporation has a projected earnings growth rate of 54.6% for the current year. Shares of the company have soared 159% over the past year.

Avery Dennison has an estimated earnings growth rate of 20.8% for 2021. The company’s shares have rallied 105% in a year’s time.

Caterpillar has an expected earnings growth rate of 45.6% for the ongoing year. Over the past year, the stock has appreciated 106%.

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