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Crown (CCK) Up 9.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Crown Holdings (CCK - Free Report) . Shares have added about 9.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Crown due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Crown Holdings Q3 Earnings & Sales Top Estimates, Up Y/Y
Crown Holdings reported third-quarter 2020 adjusted earnings per share of $1.96, surpassing the Zacks Consensus Estimate of $1.60. The bottom-line figure increased 25.6% year over year.
Including one-time items, earnings per share improved 17% year over year to $1.59 in the reported quarter.
Net sales in the quarter came in at $3,167 million, up from the year-ago quarter’s $3,084 million. The top line increased on solid beverage-can and food-can volumes, partly offset by the pass through of lower material costs. The reported figure also beat the Zacks Consensus Estimate of $3,060 million.
Cost and Margins
Cost of products sold was up 0.9% year over year to $2,478 million. On a year-over-year basis, gross profit climbed 9.5% to $689 million. Gross margin expanded to 21.8% from the year-ago quarter’s 20.4%.
Selling and administrative expenses declined 2.6% year over year to $152 million. Segment operating income increased 16.7% year over year to $461 million during the September-end quarter. Operating margin came in at 14.6% compared with the 12.8% recorded in the prior-year quarter.
Segment Performance
Net sales in the Americas Beverage segment came in at $960 million, up 15% year over year. Segment operating profit jumped 44% year over year to $193 million.
The European Beverage segment’s sales inched up 0.5% year over year to $418 million. Operating income came in at $76 million, up 18.7% year on year.
Revenues in the European Food segment climbed 7.2% year over year to $623 million. Segment operating profit increased 14% year over year to $90 million.
The Asia-Pacific segment’s revenues declined 12% year over year to $281 million. Operating profit fell 12.7% year over year to $41 million.
Revenues in the Transit Packaging segment totaled $511 million compared with the year-ago quarter’s $564 million. Operating profit was down 2.7% year over year to $72 million.
Financial Update
Crown Holdings had cash and cash equivalents of $613 million at the end of the reported quarter compared with the year-earlier quarter’s $339 million. The company generated $309 million cash in operating activities during the first nine months of 2020 compared with the $201 million witnessed in the comparable period in 2019.
As of the July-September quarter’s end, Crown Holdings’ long-term debt decreased to $8,039 million from $8,042 million as of end of the prior-year quarter.
The company plans to initiate a quarterly dividend of at least 20 cents per share. It will make the first payment in the first quarter of 2021.
Outlook
Crown Holdings now expects fourth-quarter adjusted earnings per share between $1.22 and $1.27. For the current year, the company now expects adjusted EPS in the range of $5.65 to $5.70. Management projects adjusted free cash flow of approximately $550 million and capital expenditures of $600 million for 2020.
The company’s products are significant part of the food and beverage supply chains, and also provide critical support to the transportation industry. It is focused on ensuring that its manufacturing facilities across the globe remain operational while continuing to meet the evolving customer demand by delivering high quality products.
Crown Holdings continues to implement several numbers of beverage-can capacity-expansion projects in a bid to meet the surging beverage-can demand. Also, it is committed to implement the previously-announced capacity-expansion projects with its strong liquidity position and sound capital structure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 12.08% due to these changes.
VGM Scores
Currently, Crown has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Crown has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Crown (CCK) Up 9.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Crown Holdings (CCK - Free Report) . Shares have added about 9.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Crown due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Crown Holdings Q3 Earnings & Sales Top Estimates, Up Y/Y
Crown Holdings reported third-quarter 2020 adjusted earnings per share of $1.96, surpassing the Zacks Consensus Estimate of $1.60. The bottom-line figure increased 25.6% year over year.
Including one-time items, earnings per share improved 17% year over year to $1.59 in the reported quarter.
Net sales in the quarter came in at $3,167 million, up from the year-ago quarter’s $3,084 million. The top line increased on solid beverage-can and food-can volumes, partly offset by the pass through of lower material costs. The reported figure also beat the Zacks Consensus Estimate of $3,060 million.
Cost and Margins
Cost of products sold was up 0.9% year over year to $2,478 million. On a year-over-year basis, gross profit climbed 9.5% to $689 million. Gross margin expanded to 21.8% from the year-ago quarter’s 20.4%.
Selling and administrative expenses declined 2.6% year over year to $152 million. Segment operating income increased 16.7% year over year to $461 million during the September-end quarter. Operating margin came in at 14.6% compared with the 12.8% recorded in the prior-year quarter.
Segment Performance
Net sales in the Americas Beverage segment came in at $960 million, up 15% year over year. Segment operating profit jumped 44% year over year to $193 million.
The European Beverage segment’s sales inched up 0.5% year over year to $418 million. Operating income came in at $76 million, up 18.7% year on year.
Revenues in the European Food segment climbed 7.2% year over year to $623 million. Segment operating profit increased 14% year over year to $90 million.
The Asia-Pacific segment’s revenues declined 12% year over year to $281 million. Operating profit fell 12.7% year over year to $41 million.
Revenues in the Transit Packaging segment totaled $511 million compared with the year-ago quarter’s $564 million. Operating profit was down 2.7% year over year to $72 million.
Financial Update
Crown Holdings had cash and cash equivalents of $613 million at the end of the reported quarter compared with the year-earlier quarter’s $339 million. The company generated $309 million cash in operating activities during the first nine months of 2020 compared with the $201 million witnessed in the comparable period in 2019.
As of the July-September quarter’s end, Crown Holdings’ long-term debt decreased to $8,039 million from $8,042 million as of end of the prior-year quarter.
The company plans to initiate a quarterly dividend of at least 20 cents per share. It will make the first payment in the first quarter of 2021.
Outlook
Crown Holdings now expects fourth-quarter adjusted earnings per share between $1.22 and $1.27. For the current year, the company now expects adjusted EPS in the range of $5.65 to $5.70. Management projects adjusted free cash flow of approximately $550 million and capital expenditures of $600 million for 2020.
The company’s products are significant part of the food and beverage supply chains, and also provide critical support to the transportation industry. It is focused on ensuring that its manufacturing facilities across the globe remain operational while continuing to meet the evolving customer demand by delivering high quality products.
Crown Holdings continues to implement several numbers of beverage-can capacity-expansion projects in a bid to meet the surging beverage-can demand. Also, it is committed to implement the previously-announced capacity-expansion projects with its strong liquidity position and sound capital structure.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 12.08% due to these changes.
VGM Scores
Currently, Crown has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Crown has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.