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What's in the Offing for Sealed Air's (SEE) Q4 Earnings?

Zacks Equity Research

Sealed Air Corporation SEE is scheduled to report fourth-quarter 2019 results on Feb 7, before the opening bell.
In the third quarter, Sealed Air delivered adjusted earnings per share of 61 cents, up 33% year over year. Total revenues increased 5% year over year on a reported basis to $1,186 million. The company beat the Zacks Consensus Estimate for both the counts.

The company surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an average surprise of 3.94%. Let’s see how things are shaping up prior to this announcement.

Over the past year, shares of Sealed Air have declined 9.0% compared with the industry’s decline of 8.5%.

Key Factors to Consider

The company’s revenue growth in the fourth quarter will be supported by higher demand for its core product portfolio, recently-introduced innovation as well as solid fresh food market and e-commerce sector.

The Zacks Consensus Estimate for fourth-quarter 2018 revenues is pegged at $1,114 million, reflecting a year-over-year decline of 9.3%. The company projects revenues of roughly $4.7 billion for the quarter, at a constant dollar growth rate of approximately 6%.

Coming to the segments, the Zacks Consensus Estimate for Food Care segment net sales is pegged at $752 million for fourth-quarter 2018, calling for a decline of 1.6% year over year. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $154 million, indicating a year-over-year drop of 5%. Unfavorable currency movement will impact Food Care results in the quarter owing to exposure to Europe, Latin America and Australia.

The Zacks Consensus Estimate for Product Care segment’s net sales is pegged at $474 million for the quarter, representing year-over-year improvement of 2.2%. The Zacks Consensus Estimate for the segment’s EBITDA is $83 million, a 13% decrease from $95 million reported in the prior-year quarter. The company expects higher absorption costs to impact fourth-quarter results at the segment due to lower global volumes.
Currency headwinds, input cost inflation and increased investment in R&D will likely affect margins in quarter. Nevertheless, Sealed Air’s fourth-quarter results are expected to reflect benefits from the company’s focus on reducing cost structure, driving operational excellence and commercializing new innovation. It will further be aided by benefits from acquisitions and favorable global business trends. The Zacks Consensus Estimate for earnings per share for the to-be-reported quarter is currently pegged at 67 cents, reflecting a 15.5% year-over-year growth.

Sealed Air Corporation Price and EPS Surprise


Sealed Air Corporation Price and EPS Surprise | Sealed Air Corporation Quote

Earnings Whispers

Our proven model does not conclusively show a beat for Sealed Air in the fourth 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 not the case here, as you will see below:

Earnings ESP: Earnings ESP for Sealed Air is 0.00%. The Zacks Consensus Estimate for the fourth quarter is pegged at 67 cents. 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.

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

Stocks to Consider

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

Columbus McKinnon Corporation CMCO has an Earnings ESP of +5.71% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Manitowoc Company, Inc. MTW has an Earnings ESP of +44.44% and a Zacks Rank #3.

Terex Corporation TEX has an Earnings ESP of +3.17% and a Zacks Rank #3.

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