Crown (CCK) Up 1.2% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Crown Holdings (CCK). Shares have added about 1.2% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

Crown Holdings Q1 Earnings & Sales Beat Estimates, Up Y/Y

Crown Holdings reported first-quarter 2021 adjusted earnings per share of $1.83, outpacing the Zacks Consensus Estimate of $1.39. The bottom-line figure also jumped 62% year over year.

Including one-time items, earnings per share surged 142% year on year to $1.57 during the reported quarter.

Net sales in the quarter came in at $3,078 million, up from the year-ago quarter’s $2,757 million. The top line increased on improved sales unit volumes across all segments and favorable currency translation. The reported figure also beat the Zacks Consensus Estimate of $3,001 million.

Cost and Margins

Cost of products sold was up 8.2% year over year to $2,401 million. On a year-over-year basis, gross profit climbed 26% to $677 million. Gross margin expanded to 21.9% from the year-ago quarter’s 19.4%.

Selling and administrative expenses inched up 1.2% year over year to $164 million. Segment operating income increased 45.3% year over year to $433 million during the March-end quarter. Operating margin came in at 14% compared with the 11% recorded in the prior-year quarter.

Segment Performance

Net sales in the Americas Beverage segment came in at $993 million, up 14% year over year. Segment operating profit jumped 40.2% year over year to $188 million.

The European Beverage segment’s sales were up 12.4% year over year to $389 million. Operating income came in at $62 million, up 59% year on year.

Revenues in the European Food segment climbed 14.4% year over year to $460 million. Segment operating profit soared 91% year over year to $63 million.

The Asia-Pacific segment’s revenues improved 9.9% year over year to $331 million. Operating profit were up 15.6% year over year to $52 million.

Revenues in the Transit Packaging segment totaled $557 million compared with the year-ago quarter’s $522 million. Operating profit was up 6% year over year to $70 million.

Financial Update

Crown Holdings had cash and cash equivalents of $588 million at the end of first-quarter 2021 compared with $765 million at the end of year-ago quarter. The company utilized $385 million cash in operating activities in the March-end quarter compared with the year-earlier period’s $607 million.

Crown Holdings’ long-term debt decreased to $7,875 million as of Mar 31, 2021 from $8,631 million as of Mar 31, 2020.

Outlook

Crown Holdings projects second-quarter 2021 adjusted earnings per share between $1.70 and $1.80. For the ongoing year, the company anticipates adjusted earnings per share in the range of $6.60 to $6.80.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, Crown has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, 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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