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WestRock (WRK) to Report Q1 Earnings: What's in the Cards?
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WestRock Company is scheduled to report first-quarter fiscal 2022 results (ended on Dec 31, 2021) on Feb 3, before the opening bell.
Q1 Estimates
The Zacks Consensus Estimate for the fiscal first-quarter revenues is pegged at $4.96 billion, suggesting growth of 12.8% from the year-ago period. The same for earnings per share stands at 63 cents, indicating a year-over-year improvement of 3%. The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings has remained unchanged over the past 30 days.
Q4 Performance
WestRock’s adjusted earnings per share and revenues both beat the Zacks Consensus Estimate and increased year over year. The company has a trailing four-quarter earnings surprise of 2.76%, on average.
Packaging products are essential for the distribution of food, beverage and pharmaceutical products. With consumers preferring to stay indoors due to the concerns regarding the emergence of different variants of the COVID-19 virus, it has been fueling demand for online grocery, beverage and pharmaceuticals delivery services. This, in turn, is driving e-commerce growth. The company’s overall packaging business has been witnessing strong demand. However, labor shortages and supply chain issues have been disrupting production and impacting shipments to customers. Additionally, three fewer shipping days in the quarter are anticipated to have led to lower volumes in the quarter. Historically, volume is seasonally lower in the consumer packaging in the fiscal first quarter.
WestRock has been witnessing higher costs for recycled fiber, virgin fiber, energy, freight and chemicals, which might have impacted its margins in the quarter to be reported. Also, a seasonal increase in healthcare costs may have put pressure on its margins. However, the company might have offset some of this impact with price increases.
Due to delays in mill maintenance in the prior fiscal, the company has 10 major mill maintenance outages or around 196,000 tons of downtime across the system in the first quarter of fiscal 2022. It is worth mentioning that the first quarter of 2022 will be the largest maintenance outage quarter since 2015. This is likely to have negatively impacted earnings by approximately $75 million.
WestRock acquired KapStone Paper and Packaging Corp in 2019 with the integration on track. The buyout has helped the company cement its presence in the Western United States. The company continues to boost its North American corrugated packaging business margins. These moves are likely to have contributed to its performance in the quarter under review. In addition, productivity, price increase actions, performance-improvement programs across its manufacturing footprint and cost savings are anticipated to have aided the company’s fiscal first-quarter performance.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for WestRock this time around. 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 but that is not the case here.
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 -6.65%.
WestRock’s shares have gained 7.2% over the past year, compared with the industry’s growth of 1.8%.
Stocks Poised to Beat Estimates
Here are some Basic Materials stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
MP Materials (MP - Free Report) has an Earnings ESP of +31.25% and a Zacks Rank #1. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 suggests year-over-year growth of 16.7%.
Shares of MP Materials have gained 22.8% over the past year. MP’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 155%.
Nutrien (NTR - Free Report) has an Earnings ESP of +0.36% and a Zacks Rank #1. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 indicates year-over-year growth of 862%.
Shares of Nutrien have appreciated 37.9% over the past year. NTR’s earnings beat the consensus mark in three of the trailing four quarters and missed once, the average surprise being 73.5%.
CF Industries (CF - Free Report) has an Earnings ESP of +9.44% and a Zacks Rank #2. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 indicates year-over-year growth of 712%.
Shares of CF Industries have gained 65.5% over the past year. CF’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 97.8%.
Image: Bigstock
WestRock (WRK) to Report Q1 Earnings: What's in the Cards?
WestRock Company is scheduled to report first-quarter fiscal 2022 results (ended on Dec 31, 2021) on Feb 3, before the opening bell.
Q1 Estimates
The Zacks Consensus Estimate for the fiscal first-quarter revenues is pegged at $4.96 billion, suggesting growth of 12.8% from the year-ago period. The same for earnings per share stands at 63 cents, indicating a year-over-year improvement of 3%. The Zacks Consensus Estimate for the company’s fiscal first-quarter earnings has remained unchanged over the past 30 days.
Q4 Performance
WestRock’s adjusted earnings per share and revenues both beat the Zacks Consensus Estimate and increased year over year. The company has a trailing four-quarter earnings surprise of 2.76%, on average.
WestRock Company Price and EPS Surprise
WestRock Company price-eps-surprise | WestRock Company Quote
Key Factors to Note
Packaging products are essential for the distribution of food, beverage and pharmaceutical products. With consumers preferring to stay indoors due to the concerns regarding the emergence of different variants of the COVID-19 virus, it has been fueling demand for online grocery, beverage and pharmaceuticals delivery services. This, in turn, is driving e-commerce growth. The company’s overall packaging business has been witnessing strong demand. However, labor shortages and supply chain issues have been disrupting production and impacting shipments to customers. Additionally, three fewer shipping days in the quarter are anticipated to have led to lower volumes in the quarter. Historically, volume is seasonally lower in the consumer packaging in the fiscal first quarter.
WestRock has been witnessing higher costs for recycled fiber, virgin fiber, energy, freight and chemicals, which might have impacted its margins in the quarter to be reported. Also, a seasonal increase in healthcare costs may have put pressure on its margins. However, the company might have offset some of this impact with price increases.
Due to delays in mill maintenance in the prior fiscal, the company has 10 major mill maintenance outages or around 196,000 tons of downtime across the system in the first quarter of fiscal 2022. It is worth mentioning that the first quarter of 2022 will be the largest maintenance outage quarter since 2015. This is likely to have negatively impacted earnings by approximately $75 million.
WestRock acquired KapStone Paper and Packaging Corp in 2019 with the integration on track. The buyout has helped the company cement its presence in the Western United States. The company continues to boost its North American corrugated packaging business margins. These moves are likely to have contributed to its performance in the quarter under review. In addition, productivity, price increase actions, performance-improvement programs across its manufacturing footprint and cost savings are anticipated to have aided the company’s fiscal first-quarter performance.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for WestRock this time around. 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 but that is not the case here.
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 -6.65%.
Zacks Rank: WestRock currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Share Price Performance
WestRock’s shares have gained 7.2% over the past year, compared with the industry’s growth of 1.8%.
Stocks Poised to Beat Estimates
Here are some Basic Materials stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
MP Materials (MP - Free Report) has an Earnings ESP of +31.25% and a Zacks Rank #1. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 suggests year-over-year growth of 16.7%.
Shares of MP Materials have gained 22.8% over the past year. MP’s earnings topped the consensus mark in each of the trailing four quarters, the average surprise being 155%.
Nutrien (NTR - Free Report) has an Earnings ESP of +0.36% and a Zacks Rank #1. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 indicates year-over-year growth of 862%.
Shares of Nutrien have appreciated 37.9% over the past year. NTR’s earnings beat the consensus mark in three of the trailing four quarters and missed once, the average surprise being 73.5%.
CF Industries (CF - Free Report) has an Earnings ESP of +9.44% and a Zacks Rank #2. The Zacks Consensus Estimate for the company’s earnings for the fourth quarter of 2021 indicates year-over-year growth of 712%.
Shares of CF Industries have gained 65.5% over the past year. CF’s earnings beat estimates in two of the trailing four quarters and missed twice, the average surprise being 97.8%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.