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Factors Setting the Tone for WestRock's (WRK) Q3 Earnings

Zacks Equity Research
·4-min read

WestRock Company WRK is scheduled to report third-quarter fiscal 2022 results (ended on Jun 30, 2022) on Aug 4, before the opening bell.

Q3 Estimates

The Zacks Consensus Estimate for the fiscal third-quarter revenues is pegged at $5.52 billion, suggesting growth of 14.5% from the year-ago quarter’s levels. The same for earnings per share stands at $1.50, indicating a year-over-year improvement of 50%. The Zacks Consensus Estimate for the company’s fiscal third-quarter earnings has gone up 1% in the past 30 days.

Q2 Performance

In the last reported quarter, WestRock’s revenues and adjusted earnings per share beat the Zacks Consensus Estimate and also increased year over year. The company has a trailing four-quarter earnings surprise of 7.50%, on average.

WestRock Company Price and EPS Surprise

WestRock Company price-eps-surprise | WestRock Company Quote

Key Factors to Note

WestRock has been witnessing solid demand for its products and solutions in key end markets. It has been focused on partnering with customers to fulfill their growing demand for sustainable, fiber-based packaging solutions. E-commerce demand remains strong across all channels, primarily during the pandemic. These factors are likely to have driven fiscal third-quarter performance. Solid demand for corrugated packaging, containerboard, food and beverage consumer packaging and industrial packaging might have contributed to growth.

Labor shortages and supply chain issues have been disrupting production and impacting shipments to customers. Higher energy, freight and chemicals costs and planned maintenance downtime are likely to have hurt margins in the quarter. However, the company might have offset some of this impact with price increases.

WestRock acquired KapStone Paper and Packaging Corp in 2019, with the integration on track. The buyout helped the company cement its presence in the Western United States. The company continues to boost its North American corrugated packaging business margins. These moves are likely to have contributed to its performance in the quarter under review.  Productivity, price increase actions, performance-improvement programs across its manufacturing footprint and cost savings may have favored the company’s fiscal third-quarter performance.

In the fiscal third quarter, maintenance downtime due to delays in mill maintenance from earlier in fiscal 2021, as well as originally planned outages, might have weighed on the company’s margins. Also, the company shut down operations at its containerboard and pulp mill located in Panama City, FL, in the quarter to be reported. WRK is expected to have recorded expenses associated with the closure, which may have impacted margins.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for WestRock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that is not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for WestRock is -1.00%.

Zacks Rank: WestRock currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Share Price Performance

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

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WestRock’s shares have lost 13.3% over the past year, compared with the industry’s decline of 16.1%.

Stocks Poised to Beat Estimates

Here are some Industrial Product stocks that you may consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases.

Cabot Corporation CBT, slated to release earnings on Aug 8, has an Earnings ESP of +0.16% and a Zacks Rank #1.

The consensus estimate for Cabot’s fiscal third-quarter earnings has been revised 1% upward in the past 60 days. The Zacks Consensus Estimate for CBT’s earnings for the quarter is pegged at $1.53.

Air Products and Chemicals, Inc. APD, slated to release earnings on Aug 4, has an Earnings ESP of +0.29% and a Zacks Rank #3.

The Zacks Consensus Estimate for Air Products’ fiscal third-quarter earnings has been stable over the past 60 days. The consensus estimate for APD’s earnings for the quarter stands at $2.61.

ATI Inc. ATI, scheduled to release earnings on Aug 4, has an Earnings ESP of +0.90% and a Zacks Rank #2.

The Zacks Consensus Estimate for ATI’s second-quarter earnings has been revised 17.8% upward in the past 60 days. The consensus estimate for ATI's earnings for the quarter is currently pegged at 37 cents.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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WestRock Company (WRK) : Free Stock Analysis Report
 
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Zacks Investment Research