A month has gone by since the last earnings report for Greif (GEF Quick QuoteGEF - Free Report) . Shares have lost about 4.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Greif due for a breakout? 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 catalysts.

Greif Earnings & Sales Surpass Estimates in Q2, Up Y/Y

Greif reported adjusted earnings per share of $2.41 in second-quarter fiscal 2022, which surpassed the Zacks Consensus Estimate of $1.79. The bottom line surged 113% year on year.

Including one-time items, EPS was $2.09 in the quarter compared with $2.51 in the prior-year quarter.

Operational Update

Sales surged 24% year over year to $1,667 million. The top line beat the Zacks Consensus Estimate of $1,591 million.

Cost of sales was up 24% year over year to $1,329 million. Gross profit amounted to $339 million, up 27% from the prior-year quarter’s levels. The gross margin came in at 20.3% compared with the prior-year quarter’s 19.8%.

Selling, general and administrative (SG&A) expenses came in at $147 million, flat year over year. Adjusted EBITDA increased 42% year over year to $251 million in the fiscal second quarter.

Segmental Performance

Sales in the Global Industrial Packaging segment increased 22% year over year to $972 million. The segment’s adjusted EBITDA amounted to $131 million compared with the year-ago quarter’s $106 million.

The Paper Packaging segment sales rose 28% year over year to $689 million in the fiscal second quarter. The segment’s adjusted EBITDA moved up to $117 million from the prior-year quarter’s $68 million.

The Land Management segment’s sales totaled $6.3 million in the reported quarter compared with $5.6 million in the year-ago quarter. Adjusted EBITDA was $3 million compared with the year-earlier quarter’s $2 million.

Financial Position

Greif reported cash and cash equivalents of $108.7 million at the end of second-quarter fiscal 2022 compared with $124.6 at the end of fiscal 2021. Cash flow from operating activities totaled $139 million in the quarter under review compared with $152 million in the prior-year quarter.

Long-term debt amounted to $1,991 million as of Apr 30, 2022, compared with $2,055 million as of Oct 31, 2021.

On Jun 7, Greif’s board announced a quarterly cash dividend of 46 cents per share of Class A Common Stock and 69 cents per share of Class B Common Stock. The dividend will be paid out on Jul 1 to shareholders of record at the close of business as of Jun 17, 2022.

Outlook

Given strong end-market demand, Greif expects fiscal 2022 adjusted EPS between $7.45 and $7.75. Adjusted free cash flow is anticipated to be between $380 million and $440 million.

Business Update

Greif completed the divestment of its 50% ownership in the Flexible Products & Services joint venture to Gulf Refined Packaging for cash proceeds of $131.6 million. The company utilized the fund for the repayment of debt.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

The consensus estimate has shifted 12.5% due to these changes.

VGM Scores

At this time, Greif has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, 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 A. 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 this revision looks promising. It comes with little surprise Greif has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.