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Crown (CCK) Up 0.6% Since Last Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Crown Holdings (CCK). Shares have added about 0.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Crown due for a pullback? 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.

Crown Holdings Q1 Earnings Beat, Sales Lag Estimates

Crown Holdings reported first-quarter 2024 adjusted earnings per share (EPS) of $1.02, which beat the Zacks Consensus Estimate of 96 cents and also the company guidance of 90 cents-$1.00. The bottom line, however, declined 15% year over year as improved results in global beverage were offset by lower volumes in other businesses.

Including one-time items, the company reported earnings from continuing operations of 56 cents per share compared with 85 cents in the prior-year quarter.

Net sales totaled $2.78 billion, down 6% from the year-ago quarter’s $2.97 billion. The reported figure missed the Zacks Consensus Estimate of $2.93 billion.

Crown Holdings witnessed a 2.5% increase in global beverage shipments attributed to 7% growth in North America and 5% growth in Europe. However, this was offset by lower volumes across most businesses. The year-over-year decline in sales also reflected a pass-through of lower material costs, which was partially mitigated by favorable foreign currency translation.

Costs and Margins

The cost of products sold decreased 7% year over year to $2.25 billion. On a year-over-year basis, gross profit dipped 5% to $537 million. The gross margin was 19.3%, up from the year-ago quarter’s 18.9%.

Selling and administrative expenses were down 3.8% year over year to $154 million. CCK reported income from operations of $245 million  compared with $269 million in the first quarter of 2023.

The total segment operating income was $308 million, which was 4% lower than the prior-year quarter’s figure of $320 million. Improved results in global beverage were offset by lower volumes in other businesses and $12 million in higher corporate costs, which include $8 million of costs related to a facility fire that led to the decline. Segment operating margin was 11.1% compared with 10.8% in the prior-year quarter.

Segment Performances

Net sales in the Americas Beverage segment totaled around $1.2 billion, down 3% year over year. The segment’s operating profit increased 6% year over year to $189 million.

The European Beverage segment’s sales inched up 0.6% year over year to $482 million. Operating income was $51 million, marking a 31% improvement from the year-ago quarter’s $39 million.

The Asia-Pacific segment’s revenues totaled $279 million, down 18% year over year. Operating profit was $42 million compared with the prior-year quarter’s $36 million.

Revenues in the Transit Packaging segment totaled $520 million, an 8% decline compared with the year-ago quarter’s $564 million. Operating profit declined 13% year over year to $68 million.

Financial Update

Crown Holdings had cash and cash equivalents of $1.1 billion at the end of the first quarter of 2024, up from $0.4 billion at the end of the prior-year quarter. The company used $102 million of cash from operating activities compared with a usage of $235 million in the prior-year period.

Crown Holdings’ long-term debt fell to $6.62 billion at the end of first-quarter 2024 from $7.05 billion at the prior-year quarter’s end.

Outlook

Crown Holdings projects second-quarter 2024 adjusted EPS between $1.55 and $1.65. It projects full-year adjusted EPS of $5.80-$6.20.

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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

Currently, Crown has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Crown has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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