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Sealed Air (SEE) to Report Q3 Earnings: What's in Store?

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Sealed Air Corporation SEE is scheduled to report third-quarter 2020 results on Oct 28, before the opening bell.

Q3 Estimates

The Zacks Consensus Estimate for quarterly earnings is pegged at 67 cents, suggesting year-over-year growth of 4.7%. The same for revenues stands at $1.19 billion, indicating a year-over-year decline of 2%.

The Zacks Consensus Estimate for third-quarter earnings has remained unrevised in the past 30 days. The company has a trailing four-quarter average earnings surprise of 17.87%.

A Sneak Peek at Q2

Sealed Air’s second-quarter earnings and revenues beat the respective Zacks Consensus Estimates but declined year over year.

Sealed Air Corporation Price and EPS Surprise

Sealed Air Corporation Price and EPS Surprise
Sealed Air Corporation Price and EPS Surprise

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

Earnings Whispers

Our proven model predicts an earnings beat for Sealed Air this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise.

Earnings ESP: Sealed Air has an Earnings ESP of +4.48%. 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 #2.

Key Factors

Sealed Air is likely to have benefited in the third quarter from elevated demand for packaging of food, beverage and healthcare products, as well as the e-commerce boom amid the stay-at-home customers owing to the coronavirus-induced crisis. Notably, 64% of the company’s revenues come in from the packaging of protein, foods, fluids and goods for the medical and life-sciences industries, while e-commerce sales contribute around 14%. Further, gains from the company’s acquisitions, including Automated Packaging Systems and AFP, are likely to get reflected in the September-end quarter results.

In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program to boost growth and earnings. The strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. Savings from these initiatives are likely to have contributed to the operating margin and thus, are anticipated to get reflected on the July-September results.

However, slowdown in the global industrial market, weak demand in certain end markets and overall impact of the coronavirus pandemic might have dented the company’s quarterly performance.

Segment Estimates

The Zacks Consensus Estimate for the Food Care segment’s third-quarter net sales is pegged at $708 million, indicating a decrease of 3%, year on year. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $163 million, suggesting growth 2% from the prior-year quarter. Part of the Food Care segment, which includes food services and restaurants, might have been adversely impacted by slowdown in the food services industry amid the pandemic.

The Zacks Consensus Estimate for the Product Care segment’s net sales is pinned at $487 million for the September-end quarter, indicating a year-over-year fall of 0.4%. The Zacks Consensus Estimate for the segment’s adjusted EBITDA is $88 million, calling for a rise of 4.8% from the year-ago quarter.

The company’s traditional packaging solutions, which include Bubble Wrap, standardized mailers, shrink film and void fill, generate around one-third of the Product Care segment’s sales. This part of the segment is bearing the brunt of the market’s shift to automation and the global industrial manufacturing slowdown. Moreover, specialty industrial applications, which include the Instapak platform and integrated fabrication solutions, account for another one-third of Product Care sales, also remain weak, thanks to the bleak industrial demand and the long-standing U.S.-China trade tiff. Therefore, product care volume might have declined in the soon-to-be-reported quarter.

Price Performance

Over the past three months, shares of Sealed Air have gained 9.3%, outperforming the industry’s growth of 5.9%.

Other Stocks Poised to Beat Earnings Estimates

Here are a few other Industrial Products stocks, which you may consider as our model shows that these too have the right combination of elements to post an earnings beat in their upcoming releases.

AGCO Corporation AGCO has an Earnings ESP of +6.07% and a Zacks Rank of 1, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Eaton Corporation plc ETN, currently a Zacks #3 Ranked stock, has an Earnings ESP of +4.98%.

Caterpillar Inc. CAT has a Zacks Rank #3 and an Earnings ESP of +0.84%, at present.

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