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Why Is Berry Global (BERY) Up 2.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Berry Global (BERY - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Berry Global due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Berry Global Q2 Earnings & Revenues Beat Estimates
Berry Global reported better-than-expected second-quarter fiscal 2021 (ended Apr 3, 2021) results. Its earnings surpassed estimates by 21.37% — this being the seventh consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 6.47%.
The company’s adjusted earnings of $1.59 per share surpassed the Zacks Consensus Estimate of $1.31. Also, the bottom line increased 34% the year-ago number of $1.19.
Revenue Details
In the quarter under review, Berry Global’s net sales were $3,370 million, reflecting year-over-year increase of 13.3%. The improvement was driven by 5% growth in organic volumes, positive impact of $92 million from favorable movements in foreign currencies, higher selling prices of $192 million owing to the pass through of higher resin costs, partially offset by $53 million of divesture sales.
Further, the top line surpassed the consensus estimate of $3,165 million.
The company reports results under four segments — Consumer Packaging–International, Consumer Packaging–North America, Health, Hygiene & Specialties, and Engineered Materials.
A brief snapshot of fiscal second-quarter segmental sales is provided below:
Consumer Packaging–International’s sales were $1,060 million compared with $970 million in the year-ago quarter. The increase was attributable to 4% growth in organic volumes and positive impact of $71 million from favorable movements in foreign currencies. It accounted for 31.3% of the quarter’s net sales.
Consumer Packaging–North America’s sales were $731 million, up 15.5% year over year. The increase was attributable to 5% rise in organic volumes and positive impact of $60 million from favorable movements in foreign currencies. It accounted for 21.7% of the quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $781 million, up 21.3% year over year. The improvement was driven by 8% increase in organic volumes and positive impact of $83 million from higher selling prices. It accounted for 23.1% of the quarter’s net sales.
Revenues from Engineered Materials increased 9.6% year over year to $798 million. The rise was driven by 3% increase in organic volumes, positive impact of $15 million from favorable movements in foreign currencies and positive impact of $69 million from higher selling prices, partially offset by $43 million of divesture sales. It accounted for 23.9% of the quarter’s net sales.
Margin Profile
In the fiscal second quarter, Berry Global’s cost of goods sold increased 13.1% to $2,706 million. It represented 80.3% of net sales compared with 80.4% in the year-ago quarter. Selling, general and administrative expenses rose 7.8% to $220 million and represented 6.5% of net sales.
Adjusted operating income in the quarter increased 15.7% to $384 million. Also, adjusted operating margin came in at 11.4%, up 20 basis points year over year. Net interest expenses were $84 million, down 24.3%.
Balance Sheet & Cash Flow
Exiting fiscal second quarter, Berry Global’s cash and cash equivalents were $843 million, down 0.5% from $847 million in the previous quarter. Current and long-term debt decreased 2% to $9,882 million sequentially.
In the first six months of fiscal 2021, the company repaid $2,683 million of borrowings. Its proceeds from borrowings totaled $2,316 million.
In the first half of fiscal 2021, it generated net cash of $638 million from operating activities, up 19.7% from the year-ago period.
Outlook
For fiscal 2021 (ending September 2021), Berry Global anticipates witnessing organic sales growth of 5% on a year-over-year basis. Also, the company raised operating EBITDA guidance at mid-point from the previous projection by $50 million to $2.25 billion
For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,575-$1,675 million and capital expenditure of $700 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Berry Global has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Berry Global has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Why Is Berry Global (BERY) Up 2.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Berry Global (BERY - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Berry Global due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Berry Global Q2 Earnings & Revenues Beat Estimates
Berry Global reported better-than-expected second-quarter fiscal 2021 (ended Apr 3, 2021) results. Its earnings surpassed estimates by 21.37% — this being the seventh consecutive quarter of earnings beat. Also, the quarter’s sales topped estimates by 6.47%.
The company’s adjusted earnings of $1.59 per share surpassed the Zacks Consensus Estimate of $1.31. Also, the bottom line increased 34% the year-ago number of $1.19.
Revenue Details
In the quarter under review, Berry Global’s net sales were $3,370 million, reflecting year-over-year increase of 13.3%. The improvement was driven by 5% growth in organic volumes, positive impact of $92 million from favorable movements in foreign currencies, higher selling prices of $192 million owing to the pass through of higher resin costs, partially offset by $53 million of divesture sales.
Further, the top line surpassed the consensus estimate of $3,165 million.
The company reports results under four segments — Consumer Packaging–International, Consumer Packaging–North America, Health, Hygiene & Specialties, and Engineered Materials.
A brief snapshot of fiscal second-quarter segmental sales is provided below:
Consumer Packaging–International’s sales were $1,060 million compared with $970 million in the year-ago quarter. The increase was attributable to 4% growth in organic volumes and positive impact of $71 million from favorable movements in foreign currencies. It accounted for 31.3% of the quarter’s net sales.
Consumer Packaging–North America’s sales were $731 million, up 15.5% year over year. The increase was attributable to 5% rise in organic volumes and positive impact of $60 million from favorable movements in foreign currencies. It accounted for 21.7% of the quarter’s net sales.
Revenues generated from Health, Hygiene & Specialties amounted to $781 million, up 21.3% year over year. The improvement was driven by 8% increase in organic volumes and positive impact of $83 million from higher selling prices. It accounted for 23.1% of the quarter’s net sales.
Revenues from Engineered Materials increased 9.6% year over year to $798 million. The rise was driven by 3% increase in organic volumes, positive impact of $15 million from favorable movements in foreign currencies and positive impact of $69 million from higher selling prices, partially offset by $43 million of divesture sales. It accounted for 23.9% of the quarter’s net sales.
Margin Profile
In the fiscal second quarter, Berry Global’s cost of goods sold increased 13.1% to $2,706 million. It represented 80.3% of net sales compared with 80.4% in the year-ago quarter. Selling, general and administrative expenses rose 7.8% to $220 million and represented 6.5% of net sales.
Adjusted operating income in the quarter increased 15.7% to $384 million. Also, adjusted operating margin came in at 11.4%, up 20 basis points year over year. Net interest expenses were $84 million, down 24.3%.
Balance Sheet & Cash Flow
Exiting fiscal second quarter, Berry Global’s cash and cash equivalents were $843 million, down 0.5% from $847 million in the previous quarter. Current and long-term debt decreased 2% to $9,882 million sequentially.
In the first six months of fiscal 2021, the company repaid $2,683 million of borrowings. Its proceeds from borrowings totaled $2,316 million.
In the first half of fiscal 2021, it generated net cash of $638 million from operating activities, up 19.7% from the year-ago period.
Outlook
For fiscal 2021 (ending September 2021), Berry Global anticipates witnessing organic sales growth of 5% on a year-over-year basis. Also, the company raised operating EBITDA guidance at mid-point from the previous projection by $50 million to $2.25 billion
For fiscal 2021, Berry Global predicts a free cash flow in the range of $875-$975 million, with cash flow from operations of $1,575-$1,675 million and capital expenditure of $700 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
Currently, Berry Global has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Berry Global has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.