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WestRock (WRK) to Report Q4 Earnings: What's in the Cards?

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Zacks Equity Research
·4 min read
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WestRock Company WRK is scheduled to report fourth-quarter fiscal 2020 results (ended as of Sep 30, 2020) on Nov 5, before the opening bell.

Which Way are Estimates Treading?

The Zacks Consensus Estimate for WestRock’s fiscal fourth-quarter revenues is pegged at $4.33 billion, suggesting a decline of 6.9% from the year-ago quarter. The same for earnings per share is pinned at 67 cents, indicating a year-over-year slump of 45.9%. The company has a trailing four-quarter average earnings surprise of 22.16%.

The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings moved north over the past 30 days.

Let’s see how things have shaped up for this announcement.

WestRock Company Price and EPS Surprise

WestRock Company Price and EPS Surprise
WestRock Company Price and EPS Surprise

WestRock Company price-eps-surprise | WestRock Company Quote

Earnings Whispers

Our proven model conclusively predicts an earnings beat for WestRock 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 an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for WestRock is +3.24%.

Zacks Rank: WestRock currently carries a Zacks Rank of 2.

Key Factors

Packaging products are essential for the distribution of food, beverage and pharmaceutical products. Further, the coronavirus pandemic has fueled e-commerce growth as consumers’ demand for online grocery, beverage and pharmaceuticals delivery services has skyrocketed following the travel restrictions worldwide. Consequently, the company’s Consumer Packaging segment is anticipated to have benefited in the fiscal fourth quarter from the elevated demand for the packaging of food, beverages, household cleaning and liquid packaging.

WestRock acquired KapStone Paper and Packaging Corp in 2019, with the integration on track. The acquisition has helped the company cement its presence in the Western United States. Further, the company continues boosting its North American corrugated packaging business margins. These moves are likely to have contributed to the fiscal fourth-quarter performance. In addition, productivity, performance-improvement programs across its manufacturing footprint and cost savings from capital investments are anticipated to have aided the company’s performance during the quarter under review.

However, waning demand across some of WestRock’s businesses due to the coronavirus crisis might have dented its fiscal fourth-quarter performance. The company’s margin in the to-be-reported quarter will likely reflect charges related to maintenance downtime.

The Zacks Consensus Estimate for the Consumer Packaging segment’s quarterly revenues is pegged at $1,619 million, calling for a decline of 3%, year on year. The Consumer Packaging segment’s adjusted EBITDA is estimated to be down 9.3% year over year to $244 million.

For the Corrugated Packaging segment revenues, the Zacks Consensus Estimate is pegged at $2,745 million, calling for a 9% fall, year on year. The segment’s adjusted EBITDA is likely to dip 26% year over year to $474 million.

Share Price Performance

WestRock’s shares have gained 23.9% over the past six months, outperforming the industry’s growth of 22.8%.

Other Stocks Poised to Beat Estimates

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

Avient Corporation AVNT currently carries a Zacks Rank #2 and has an Earnings ESP of +1.48%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Koppers Holdings Inc. KOP has an Earnings ESP of +19.27% and holds a Zacks Rank of 2 currently.

Albemarle Corporation ALB has an Earnings ESP of +5.73% and carries a Zacks Rank #3, at present.

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