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Berry Global (BERY) Gains From RPC Buyout Amid Cost Woes
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On Jun 9, we issued an updated research report on Berry Global Group, Inc. (BERY - Free Report) .
In the past three months, this Zacks Rank #3 (Hold) stock has returned 48.5% compared with the industry’s growth of 20.5%.
Existing Business Scenario
Berry Global’s diversified business structure along with a strong portfolio of products allows it to mitigate the adverse impacts of weakness in one end-market, with strength across others. Moving ahead, the company believes that both of its Consumer Packaging segments will show resilience during the coronavirus outbreak-led global market downturn on the back of strength across the healthcare, hygiene and grocery end-markets. Also, its Health, Hygiene & Specialties segment is likely to benefit from strong demand for its healthcare products.
Also, the company’s buyout of RPC Group (closed in July 2019) has been enhancing its growth opportunities in the plastic and recycled packaging industry. Notably, in the first quarter of fiscal 2020 (ended December 2019) and the second quarter of fiscal 2020 (ended March 2020), the buyout contributed 38.4% and 39.5%, respectively, to sales. Notably, it expects the deal to generate annual cost synergies of $150 million, with half of it likely to be realized in fiscal 2020 (ending September 2020).
However, persistent weakness across its Engineered Materials segment remains a concern for the company. For instance, in the fiscal second quarter, the Engineered Materials segment’s sales recorded a decline of 3.4% year over year due to weakness in industrial end markets amid the coronavirus outbreak-led market downturn. The headwinds are likely to persist in the near term.
In addition, Berry Global has been witnessing a rise in costs and expenses over some time. Notably, in the first quarter of fiscal 2020 and the second quarter of fiscal 2020, its cost of goods sold rose 42.1% and 51.5%, respectively, year over year despite its cost-reduction initiatives. Further, in the fiscal first and second quarters, the company's selling, general and administrative expenses jumped 84.7% and 42.7%, respectively.
Intellicheck delivered a positive earnings surprise of 70.24%, on average, in the trailing four quarters.
Alcoa delivered a positive earnings surprise of 12.78%, on average, in the trailing four quarters.
Broadwind delivered a positive earnings surprise of 50.00%, on average, in the trailing four quarters.
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Berry Global (BERY) Gains From RPC Buyout Amid Cost Woes
On Jun 9, we issued an updated research report on Berry Global Group, Inc. (BERY - Free Report) .
In the past three months, this Zacks Rank #3 (Hold) stock has returned 48.5% compared with the industry’s growth of 20.5%.
Existing Business Scenario
Berry Global’s diversified business structure along with a strong portfolio of products allows it to mitigate the adverse impacts of weakness in one end-market, with strength across others. Moving ahead, the company believes that both of its Consumer Packaging segments will show resilience during the coronavirus outbreak-led global market downturn on the back of strength across the healthcare, hygiene and grocery end-markets. Also, its Health, Hygiene & Specialties segment is likely to benefit from strong demand for its healthcare products.
Also, the company’s buyout of RPC Group (closed in July 2019) has been enhancing its growth opportunities in the plastic and recycled packaging industry. Notably, in the first quarter of fiscal 2020 (ended December 2019) and the second quarter of fiscal 2020 (ended March 2020), the buyout contributed 38.4% and 39.5%, respectively, to sales. Notably, it expects the deal to generate annual cost synergies of $150 million, with half of it likely to be realized in fiscal 2020 (ending September 2020).
However, persistent weakness across its Engineered Materials segment remains a concern for the company. For instance, in the fiscal second quarter, the Engineered Materials segment’s sales recorded a decline of 3.4% year over year due to weakness in industrial end markets amid the coronavirus outbreak-led market downturn. The headwinds are likely to persist in the near term.
In addition, Berry Global has been witnessing a rise in costs and expenses over some time. Notably, in the first quarter of fiscal 2020 and the second quarter of fiscal 2020, its cost of goods sold rose 42.1% and 51.5%, respectively, year over year despite its cost-reduction initiatives. Further, in the fiscal first and second quarters, the company's selling, general and administrative expenses jumped 84.7% and 42.7%, respectively.
Stocks to Consider
Some better-ranked stocks from the Zacks Industrial Products sector are Intellicheck, Inc. (IDN - Free Report) , Alcoa Corporation (AA - Free Report) and Broadwind Energy Inc. (BWEN - Free Report) . All the companies currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Intellicheck delivered a positive earnings surprise of 70.24%, on average, in the trailing four quarters.
Alcoa delivered a positive earnings surprise of 12.78%, on average, in the trailing four quarters.
Broadwind delivered a positive earnings surprise of 50.00%, on average, in the trailing four quarters.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>