Sealed Air (SEE) To Report Q1 Earnings: What's In Store?

Sealed Air Corporation (NYSE:SEE) is scheduled to report first-quarter 2019 results on May 1, before the opening bell.

In fourth-quarter 2018, Sealed Air delivered adjusted earnings per share of 75 cents, up 29% year over year. Total revenues increased 2.6% year over year on a reported basis to $1,260 million. The company beat the Zacks Consensus Estimate on both the counts.

The company surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive surprise of 6.49%. Let’s see how things are shaping up prior to this announcement.

Over the past year, shares of Sealed Air have gained arund 2.7% outperforming the industry’s growth of 0.6%.

Key Factors to Consider

The company’s revenue growth in the first quarter will be supported by higher demand for its core product portfolio, recently-introduced innovation as well as solid fresh food market and the e-commerce sector.

The Zacks Consensus Estimate for first-quarter 2019 revenues is pegged at $1,131 million, relatively flat year over year. The Zacks Consensus Estimate for earnings per share for the to-be-reported quarter is currently pinned at 57 cents, reflecting year-over-year growth of 11.7%.

In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program, in a move to drive its growth and earnings. The new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. Total annualized savings from both programs are expected to be approximately $70 million in 2019.

Coming to the segments, the Zacks Consensus Estimate for the Food Care segment’s net sales is pegged at $674 million for first-quarter 2019, calling for a decline of 3.2% year over year. The Zacks Consensus Estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) is pegged at $140 million, indicating year-over-year growth of 3.7%. Unfavorable currency movement is likely to impact Food Care results this year.

The Zacks Consensus Estimate for the Product Care segment’s net sales is pegged at $455 million for the quarter, representing year-over-year improvement of 4.6%. The Zacks Consensus Estimate for the segment’s EBITDA is $82 million, up 5% from the $78 million reported in the prior-year quarter. The company expects currency headwind and lower volume growth to hurt the segment results in 2019.

Currency headwinds, input cost inflation and increased investment in R&D will likely affect margins in the March-end quarter. Nevertheless, Sealed Air’s first-quarter results are expected to reflect benefits from the company’s focus on reducing cost structure, driving operational excellence and commercializing new innovation. Results will further be aided by benefits from acquisitions and favorable global business trends.

Sealed Air Corporation Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show a beat for Sealed Air in the first quarter. This is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Earnings ESP: Earnings ESP for Sealed Air is -4.15%. The Most Accurate Estimate is 55 cents and the Zacks Consensus Estimate is 57 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Sealed Air currently carries a Zacks Rank #3.

It should be noted that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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

TPI Composites, Inc. (NASDAQ:TPIC) has an Earnings ESP of +203.03% and holds a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Colfax Corporation (NYSE:CFX) has an Earnings ESP of +2.27% and carries a Zacks Rank #3.

Regal Beloit Corporation (NYSE:RBC) has an Earnings ESP of +2.13% and carries a Zacks Rank #3.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>