Reynolds (NASDAQ:REYN) Reports Q4 In Line With Expectations
Household products company Reynolds (NASDAQ:REYN) reported results in line with analysts' expectations in Q4 FY2023, with revenue down 7.5% year on year to $1.01 billion. It made a GAAP profit of $0.65 per share, improving from its profit of $0.53 per share in the same quarter last year.
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Reynolds (REYN) Q4 FY2023 Highlights:
Revenue: $1.01 billion vs analyst estimates of $1.01 billion (small beat)
EPS: $0.65 vs analyst estimates of $0.62 (4.9% beat)
Guidance for EPS: Q1 guidance of $0.22 (vs. expectations of $0.20) and full year guidance of $1.61 (in line)
Free Cash Flow of $194 million, similar to the previous quarter
Gross Margin (GAAP): 30.7%, up from 22.7% in the same quarter last year
Organic Revenue was down 8% year on year
Sales Volumes were down 7% year on year
Market Capitalization: $5.84 billion
Best known for its aluminum foil, Reynolds (NASDAQ:REYN) is a household products company whose products focus on food storage, cooking, and waste.
Household Products
Household products companies engage in the manufacturing, distribution, and sale of goods that maintain and enhance the home environment. This includes cleaning supplies, home improvement tools, kitchenware, small appliances, and home decor items. Companies within this sector must focus on product quality, innovation, and cost efficiency to remain competitive. Household products stocks are generally stable investments, as many of the industry's products are essential for a comfortable and functional living space. Recently, there's been a growing emphasis on eco-friendly and sustainable offerings, reflecting the evolving consumer preferences for environmentally conscious options.
Sales Growth
Reynolds is larger than most consumer staples companies and benefits from economies of scale, giving it an edge over its smaller competitors.
As you can see below, the company's annualized revenue growth rate of 4.8% over the last three years was weak as consumers bought less of its products. We'll explore what this means in the "Volume Growth" section.
This quarter, Reynolds reported a rather uninspiring 7.5% year-on-year revenue decline to $1.01 billion in revenue, in line with Wall Street's estimates. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.
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Key Takeaways from Reynolds's Q4 Results
We liked that revenue beat by a small amount and EPS beat more convincingly. We were also impressed by Reynolds's optimistic earnings forecast for next quarter, which beat analysts' expectations, although the full year outlook was in line. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is up 4.2% after reporting and currently trades at $29 per share.
So should you invest in Reynolds right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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