Sealed Air (SEE) to Report Q2 Earnings: What to Expect?
Sealed Air Corporation SEE is scheduled to report second-quarter 2023 results on Aug 8 before the opening bell.
Q2 Estimates
The Zacks Consensus Estimate for second-quarter revenues is pegged at $1.42 billion, suggesting a 0.2% dip from the year-ago reported figure. The consensus estimate for quarterly earnings is pinned at 68 cents per share, indicating a year-over-year decline of 32.7%.
Q1 Performance
Sealed Air’s first-quarter 2022 earnings and sales decreased year over year. The company missed the Zacks Consensus Estimate on both the metrics. It has a trailing four-quarter earnings surprise of 1.97%, on average.
Sealed Air Corporation Price and EPS Surprise
Sealed Air Corporation price-eps-surprise | Sealed Air Corporation Quote
What the Zacks Model Indicates
Our proven model doesn’t conclusively predict an earnings beat for Sealed Air this time around. 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. However, that’s not the case here.
Earnings ESP: Sealed Air has an Earnings ESP of -4.90%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Key Factors
Sealed Air has been witnessing a downtrend in overall volumes over the past five quarters. The volume decline has been more pronounced in the Protective segment where it was down 11% in 2022 and 18% in the first quarter of 2023. This reflects recessionary pressures in the industrial and fulfillment markets. In the Food segment, volumes decreased 2% in 2022 and 2.6% in the first quarter of 2023. This was driven by food retail market declines and the impact of supply disruptions.
We anticipate these factors, along with customer destocking, to have impacted volumes in the second quarter. Throughout the quarter, industry participants have noted that the supply chain-issues have been abating. Reflecting this, we expect the volume decline to moderate from the previous quarters.
Our model projects the Food segment to witness a decline of 1% in volumes in the second quarter, which is an improvement from the 2.6% decline in the first quarter of 2023. For the Protective segment, our model factors in a volume decline of 13.8% in the second quarter, which suggests an improvement from the 22.5% decline in the first quarter of 2023.
Our model estimate for the Food segment’s second-quarter net sales is $903.5 million, suggesting growth of 12% from the prior-year period’s reported figure. The impact of lower volumes is likely to have been offset by improved pricing (1.9%) and a 11.7% contribution from the recent Liquibox acquisition. Our estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) stands at $188 million, indicating year-over-year growth of 12%.
Our estimate for the Protective segment’s second-quarter net sales is $525 million, indicating a year-over-year fall of 14%. This is mainly due to the volume decline of 13.8% which is likely to have offset the pricing growth of 1.2%. Our estimate for the segment’s adjusted EBITDA is $104.6 million, suggesting a year-over-year decline of 17%.
Sealed Air’s overall volumes are expected to decline 6.5%, as per our model. We expect pricing growth of 1.6% in the quarter and a contribution of 6.6% from acquisitions. The company’s second-quarter performance is likely to have been supported by the sustained demand for packaging of food, beverage and healthcare products, and e-commerce activities.
Savings from the company’s Reinvent SEE Strategy initiatives have been driving productivity gains and mitigating supply-chain challenges. This is expected to have driven the operating margin performance in the June-ended quarter. We expect the impact of inflationary costs (material, freight) to have lessened in the second quarter. However, the company has been increasing its R&D investments in innovation and automation, which are anticipated to have weighed on its margins.
Price Performance
In the past year, shares of Sealed Air have lost 21.4%, compared with the industry’s 1.5% fall.
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Stocks to Consider
Here are some Industrial Products stocks, which according to our model, have the right combination of elements to beat on earnings in their upcoming releases.
Tetra Tech TTEK has an Earnings ESP of +20.00% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is slated to release third-quarter fiscal 2023 (ended Jun 30, 2023) financial numbers on Aug 9. The Zacks Consensus Estimate for Tetra Tech’s fiscal third-quarter earnings has been revised upward 25.4% in the past 60 days. The company delivered a trailing four-quarter earnings surprise of 11%, on average.
Xometry XMTR has an Earnings ESP of +4.76% and a Zacks Rank of 3. The company is slated to release second-quarter fiscal 2023 results on Aug 9.
The Zacks Consensus Estimate for XMTR’s fiscal second-quarter earnings has been revised downward from a loss of 16 cents per share to a loss of 21 cents over the past 60 days. The company delivered a trailing four-quarter earnings surprise of 0.53%, on average.
Cintas CTAS has an Earnings ESP of +0.93% and a Zacks Rank of 3. The company is expected to report a year-over-year improvement in revenues and earnings in its upcoming fourth-quarter fiscal 2023 results.
The Zacks Consensus Estimate for CTAS’ earnings for the quarter has remained stable at $3.62 per share over the past 60 days. The company pulled off a trailing four-quarter earnings surprise of 4.8%, on average.
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Tetra Tech, Inc. (TTEK) : Free Stock Analysis Report
Sealed Air Corporation (SEE) : Free Stock Analysis Report
Cintas Corporation (CTAS) : Free Stock Analysis Report
Xometry, Inc. (XMTR) : Free Stock Analysis Report
