WestRock Company WRK is scheduled to report second-quarter fiscal 2023 results (ended Mar 31, 2023) on May 4, before the opening bell.
The Zacks Consensus Estimate for fiscal second-quarter revenues is pegged at $5.29 billion, suggesting a fall of 1.7% from the year-ago quarter's reported figure. The same for earnings per share is pegged at 51 cents, indicating a year-over-year decline of 56.4%. The Zacks Consensus Estimate for the company’s fiscal second-quarter earnings has moved down 7.3% in the past 60 days.
In the last reported quarter, WestRock delivered a year-over-year decline in adjusted earnings per share and revenues. The top and bottom lines missed the Zacks Consensus Estimates. WRK’s earnings have surpassed the Zacks Consensus Estimate in three of the last four trailing quarters, delivering an earnings surprise of 3.1%, on average.
WestRock Company Price and EPS Surprise
WestRock Company price-eps-surprise | WestRock Company Quote
Key Factors to Note
WestRock witnessed a slowdown in volumes in the corrugated packaging segment as customers have been rebalancing their inventory and purchasing has been muted due to weak economic conditions. This is expected to get reflected in the company’s top-line results in the second quarter of fiscal 2023.
Wholesome costs were expected to have been favorable sequentially (natural gas and recycled fiber), and higher freight, wage and chemicals costs are likely to have hurt its margins. Labor shortages and supply-chain issues have also been disrupting production, and impacting WRK’s shipments to customers.
Unfavorable non-cash pension expenses due to higher interest rates and market volatility are also expected to have impacted its profits in the fiscal second quarter. The company’s results will also reflect the impacts of four fewer shipping days.
Pricing actions and productivity initiatives undertaken by the company are expected to have negated some of these headwinds. WestRock is likely to have benefitted from solid demand for corrugated packaging, containerboard, food and beverage consumer packaging, and industrial packaging.
The Zacks Consensus Estimate for WRK’s Consumer Packaging segment’s quarterly revenues is pegged at $1,389 million, suggesting growth of 11.3% from the prior-year period's reported figure. The segment’s adjusted EBITDA is estimated to be $127 million, indicating a year-over-year fall of 38.4%.
For the Corrugated Packaging segment’s revenues, the Zacks Consensus Estimate is pinned at $2,428 million, implying growth of 4.7% from the year-ago quarter's reported number. The segment’s adjusted EBITDA is projected at $119 million, indicating a 63.8% year-over-year fall.
The revenue estimate for the Paper segment is pegged at $1,231 million, suggesting a decline of 20% from the prior-year reported figure. The same for the Distribution segment is pinned at $326 million, indicating a 9.4% year-over-year fall.
What the Zacks Model Unveils
Our proven model does not 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 chances of an earnings beat. You can see the complete list of today's Zacks #1 Rank stocks here.
Earnings ESP: The Earnings ESP for WestRock is +5.88%. You can uncover the best stocks before they're reported with our Earnings ESP Filter.
Zacks Rank: WRK currently carries a Zacks Rank of 4 (Sell).
Share Price Performance
WestRock’s shares have lost 40.1% over the past year compared with the industry’s 30.2% decline.
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Stocks to Consider
Here are some Basic Materials stocks, which, according to our model, have the right combination of elements to post an earnings beat in their upcoming releases.
B2Gold Corp. BTG, scheduled to release first-quarter 2023 earnings on May 9, has an Earnings ESP of +12.50% and has a Zacks Rank of 3.
The consensus estimate for B2Gold’s first-quarter earnings has moved up 20% in the past 60 days. The Zacks Consensus Estimate for BTG’s earnings for the quarter is pegged at 6 cents.
Air Products and Chemicals APD, scheduled to release first-quarter 2023 earnings on May 9, has an Earnings ESP of +2.25% and currently carries a Zacks Rank of 3.
The Zacks Consensus Estimate for Air Products’ first-quarter earnings has been unchanged in the past 60 days. The consensus estimate for APD’s earnings for the first quarter is pegged at $2.64.
Koppers KOP, expected to release first-quarter earnings on May 5, has an Earnings ESP of +12.66%.
The Zacks Consensus Estimate for Koppers’ first-quarter earnings is pegged at 76 cents. KOP currently carries a Zacks Rank of 3.
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