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WestRock’s Revenue Rose and Income Fell in Fiscal 1Q16

Gabriel Kane

Yesterday’s Consumer Pops and Drops: HAR, BC, WRK, UA, and INGR

(Continued from Prior Part)

Price movement of WestRock

WestRock (WRK) has a market capitalization of $8.1 billion. WRK fell by 2.9% to close at $31.65 per share as of January 28, 2016. Its price movements on a weekly, monthly, and year-to-date (or YTD) basis are -13.1%, -30.6%, and -30.6%, respectively.

Technically, the stock has broken its support and is trading below all of its moving averages. Currently, WRK is trading 20.2% below its 20-day moving average, 28.9% below its 50-day moving average, and 40.3% 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 -14.1% as of January 27, 2016.

The competitors of WestRock and their market capitalizations are as follows:

  • International Paper Company (IP) — $13.5 billion
  • Packaging Corporation of America (PKG) — $4.7 billion
  • Graphic Packaging Holding Company (GPK) — $3.5 billion

Performance of WestRock in fiscal 1Q16

WestRock 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 of 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 1.9 and 1.15, respectively, in fiscal 4Q15.

The price-to-earnings and price-to-book value ratios of WestRock are 10.0x and 0.71x, respectively, as of January 28, 2016.

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