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Sealed Air (SEE) to Report Q2 Earnings: What's in the Cards?

Zacks Equity Research

Sealed Air Corporation SEE is scheduled to report second-quarter 2019 results on Aug 2, before the opening bell. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average positive surprise of 6.49%.

Which Way Are Estimates Treading?

The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.17 billion, indicating an improvement of 0.99% from the year-ago quarter. The same for earnings stands at 64 cents, suggesting in-line results with the prior-year quarter. Notably, the Zacks Consensus Estimate has remained stable over the past 30 days.

Over the past year, shares of Sealed Air have fallen 0.1% compared with the  industry’s decline of 29.3%. Will the upcoming earnings release provide a boost to Sealed Air’s stock? Let’s take a look.

Key Factors to Consider

Higher demand for its core product portfolio, recently-introduced innovation and solid fresh food market, and the e-commerce sector will drive the company’s second-quarter revenues.

In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program, in a move to drive growth and earnings. The new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. Total annualized savings from both programs are expected to be approximately $70 million in 2019. Consequently, the second quarter’s earnings will reflect the savings from the restructuring actions. Further, results will be aided by benefits from acquisitions and favorable global business trends.

However, currency headwinds, input cost inflation and increased investment in R&D are likely to affect margins in the June-end quarter.

Sealed Air Corporation Price and EPS Surprise
 

Sealed Air Corporation Price and EPS Surprise

Sealed Air Corporation price-eps-surprise | Sealed Air Corporation Quote

Segmental Expectations

The Zacks Consensus Estimate for the Food Care segment’s net sales is pegged at $691 million for second-quarter 2019, indicating year-over-year decline of 3%. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $143 million, suggesting year-over-year growth of 6%. Unfavorable currency movement is likely to impact Food Care results in the to-be-reported quarter.

The Zacks Consensus Estimate for the Product Care segment’s net sales is pegged at $46 million for the quarter, indicating year-over-year improvement of 6%. The Zacks Consensus Estimate for the segment’s EBITDA is $78 million, suggesting a decline of 1% from the $79 million reported in the prior-year quarter. Currency headwind and lower volume growth in the U.K and China will hurt the segment results in the April-June quarter.

Earnings Whispers

Our proven model shows that Sealed Air is likely to beat estimates in the second quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is the case here as you will see below:

Earnings ESP: Earnings ESP for Sealed Air is +1.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sealed Air currently carries a Zacks Rank of 3, which when combined with a positive ESP, makes us reasonably confident of an earnings beat.

It should be noted that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other companies that you may want to consider, as our model shows these too have the right combination of elements to post an earnings beat this quarter:

Axon Enterprise, Inc. AAXN has an Earnings ESP of +10.21% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AptarGroup, Inc. ATR has an Earnings ESP of +0.56% and a Zacks Rank #2.
 
Tenaris S.A TS has an Earnings ESP of +5.11% and a Zacks Rank #3.

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Sealed Air Corporation (SEE) : Free Stock Analysis Report
 
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