Greif (GEF) Down 5.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Greif (NYSE:GEF). Shares have lost about 5.4% 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 drivers.

Greif Earnings & Sales Beat Estimates in Q4, Up Y/Y

Greif reported fourth-quarter fiscal 2021 adjusted EPS of $1.93, which surpassed the Zacks Consensus Estimate of $1.49. The bottom line increased 147% year on year.

Including one-time items, EPS was $1.74 in the quarter compared with 74 cents in the prior-year quarter.

Operational Update

Sales surged 36% year over year to $1,578 million. The top line beat the Zacks Consensus Estimate of $1,445 million.

Cost of sales was up 38% year over year to $1,282 million. Gross profit amounted to $296 million, up 28% from the prior-year quarter’s levels. Gross margin came in at 18.7% compared with the year-ago quarter’s 19.9%.

Selling, general and administrative (SG&A) expenses were up 22% year over year to $142 million. Adjusted operating profit soared 66% year over year to $154 million. Adjusted operating margin was 9.8% in the reported quarter compared with 8.0% in the year-earlier period. Adjusted EBITDA increased 37% year over year to $211 million in the fiscal fourth quarter.

Segmental Performance

Sales in the Global Industrial Packaging (NYSE:PKG) segment increased 46% year over year to $952 million. The segment’s adjusted EBITDA amounted to $121 million compared with the year-ago quarter’s $74 million.

The Paper Packaging segment sales rose 24% year over year to $622 million in the fiscal fourth quarter. The segment’s adjusted EBITDA moved up to $87.7 million from the prior-year quarter’s $77.4 million.

The Land Management segment’s sales totaled $4.9 million in the reported quarter compared with $6.7 million in the year-ago quarter. Adjusted EBITDA was $2.2 million, down from the year-earlier quarter’s $3 million.

Financials

As of fourth-quarter fiscal 2021-end, Greif reported cash and cash equivalents of $124.6 million, compared with $105.9 million as of the end of fiscal 2020. Cash flow from operating activities totaled $137 million in the quarter under review compared with $200 million in the prior-year quarter.

Long-term debt amounted to $2,054.8 million as of Oct 31, 2021, compared with $2,335.5 million as of Oct 31, 2020.

On Dec 7, Greif’s board announced a quarterly cash dividend of 46 cents per share of Class A Common Stock and 68 cents per share of Class B Common Stock. The dividend payout will be made on Jan 1 to shareholders of record at the close of business on Dec 17, 2021.

Fiscal 2021 Results

Greif reported an adjusted EPS of $5.60 for fiscal 2021 compared with $3.22 reported in fiscal 2020. Earnings also beat the Zacks Consensus Estimate of $5.16. Including one-time items, the bottom line came in at $6.54, up 257% from the $1.83 reported in fiscal 2020.

Sales increased 23% year over year to $5.56 billion. The top line also surpassed the Zacks Consensus Estimate of $5.42 billion.

Outlook

Given strong end-market demand, Greif expects fiscal 2022 adjusted EPS between $5.85 and $6.45. Adjusted free cash flow is anticipated between $400 million and $460 million.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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