Greif (GEF) To Report Q4 Earnings: What's In The Offing?

Greif, Inc. (NYSE:GEF) is scheduled to release fourth-quarter fiscal 2018 financial numbers after the market closes on Dec 5.

Over the trailing four quarters, Greif surpassed the Zacks Consensus Estimate in two occasions and missed in the other two, the average negative beat being 3.52%.

Let’s see how things are shaping up prior to this announcement.

Key Factors to Consider

In the fiscal fourth quarter, Greif is poised to gain from its ongoing focus on improving customer services and project expansion. However, elevated transportation costs remain a headwind. Further, its performance will be affected by the turbulent global industrial economy, strengthening of U.S. dollar and weak agricultural sales.

Notably, Greif anticipates that results for the Flexible Products & Services segment in the fiscal fourth quarter will be lower compared with third-quarter fiscal 2018 due to the timing of various fertilizer seasons around the world, and planned holidays in Romania and Turkey. Per the Zacks Consensus Estimates, net sales in the segment are likely to grow around 7% to $81 million in the quarter under review.

Greif’s Rigid Industrial Packaging & Services segment is expected to benefit from stabilizing raw material costs. It will allow contractual price adjustment mechanisms in customer contracts to combat with the rapidly rising costs experienced during the first half of fiscal 2018. We expect quarterly sales for the segment to be $683 million in the quarter under review, up around 3% year over year.

The company expects the Paper Packaging & Services segment to benefit from a more favorable price-cost relationship due to containerboard price increases and the impact of favorable Old Corrugated Container (OCC) costs. The Zacks Consensus Estimate for sales for the segment is at $251 million for the fiscal fourth quarter, indicating 12% year-over-year growth.

Moreover, estimates for the Land Management segment’s sales for the quarter to be reported are pegged at $6.5 million, reflecting a year-over-year increase of 2%.

The Zacks Consensus Estimate for earnings per share for the fiscal fourth quarter is pegged at $1.18, reflecting year-over-year growth of around 20%. The Zacks Consensus Estimate for total sales of $1,017 million for the quarter also indicates 5% growth from the prior-year quarter.

For fiscal 2018, Greif expects its adjusted earnings per share to be $3.53-$3.69. This will be backed by improved price/cost balance in containerboard, and improving performance in the Flexible Products & Services segment. The company, however, maintained its capital expenditure outlook at $120-$140 million.

Greif anticipates fiscal 2018 results to benefit from strong demand and its focus on improving customer services. However, transportation tightness in North America is impacting its in-transit inventory levels. The Zacks Consensus Estimate for net sales is pegged at $3,903 million and the same for earnings per share is pegged at $3.63 for fiscal 2018.

Share Price Performance

Over the past year, Greif has outperformed its industry, with respect to price performance. The stock lost around 8% while the industry recorded a decline of around 10%.

Earnings Whispers

Our proven model does not conclusively show that Greif is likely to beat estimates this quarter. This is because a stock must have the right combination of the two main ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. But that is not the case here as you will see below.

Earnings ESP: Greif has an Earnings ESP of 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.18. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Greif currently carries a Zacks Rank #3, which, along with an Earnings ESP of 0.00%, makes surprise prediction difficult.

Stocks Poised to Beat Earnings Estimates

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Cooper Companies, Inc. (NYSE:COO) has an Earnings ESP of +2.26% and a Zacks Rank #3. Its shares have gained 15% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar General Corporation (NYSE:DG) has an Earnings ESP of +1.62% and a Zacks Rank #3. The stock has gained 26% in a year’s time.

Five Below, Inc. (NASDAQ:FIVE) has an Earnings ESP of +0.76% and a Zacks Rank #3. The company’s shares have rallied 70% during the past year.

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