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Moody’s Has Raised WestRock’s Outlook to Positive

Gabriel Kane

Friday’s Consumer Pops and Drops: VFC, ADM, WRK, MDLZ, K, BERY

(Continued from Prior Part)

Price movement of WestRock

WestRock (WRK) has a market cap of $8.0 billion. WRK fell by 3.6% to close at $31.56 per share as of February 19, 2016. The price movements on weekly, monthly, and year-to-date (or YTD) bases were 5.4%, -11.4%, and -30.0%, respectively.

Technically, the stock has broken the support and is trading below all moving day averages. Currently, WRK is trading 3.8% below its 20-day moving average, 19.0% below its 50-day moving average, and 37.6% below its 200-day moving average.

The iShares Global Timber & Forestry ETF (WOOD) invests 3.1% of its holdings in WestRock. The ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD is -13.8% as of February 18, 2016.

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

  • International Paper (IP) — $14.1 billion
  • Packaging Corporation of America (PKG) — $4.4 billion
  • Graphic Packaging Holding (GPK) — $3.6 billion

Moody’s rating for WestRock

Moody’s Investors Service has upgraded WestRock’s rating outlook to positive from stable and affirmed WestRock’s senior unsecured rating at Baa3.

Performance of WestRock in fiscal 1Q16

WestRock (WRK) reported fiscal 1Q16 net sales of $3,680.7 million, a rise of 46.4% compared to net sales of $2,514.2 million in fiscal 1Q15. It reported consumer packaging, specialty chemicals, and land and development segment sales of $1,542.2 million, $209.8 million, and $15.4 million, respectively, in fiscal 1Q16. Sales for its corrugated packaging segment rose by 6.6% in fiscal 1Q16 compared to fiscal 1Q15.

The company’s net income and EPS (earnings per share) fell to -$453.5 million and -$1.76, respectively, in fiscal 1Q16, compared to $125.1 million and $0.88, respectively, in fiscal 1Q15.

Meanwhile, its cash and cash equivalents and inventories rose by 3.8% and 3.3%, respectively, in fiscal 1Q16 on a quarterly basis. Its current ratio fell to 1.8, and its debt-to-equity ratio rose to 1.23, in fiscal 1Q16 compared to a current ratio and debt-to-equity ratio of 1.9 and 1.15, respectively, in fiscal 4Q15.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of WestRock are 58.4x and 0.74x, respectively, as of February 19, 2016.

In the next part, we’ll look at Mondelez International.

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