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Category: Stock Market and Greif Inc
Date: 4 June 2020 Stock Price: $36.20 We take a look at the 2nd quarter earnings report of the 2020 fiscal year of industrial packaging group, Greif. The group produces steel, plastic and fibre drums amongst other things. The have held up pretty well during the covid-19 pandemic.
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About Greif
Greif, Inc. (NYSE: GEF, GEF.B) is a global leader in industrial packaging products and services and is pursuing its vision to become the world’s best performing customer service company in industrial packaging. The company produces steel, plastic and fibre drums, intermediate bulk containers, reconditioned containers, flexible products, containerboard, uncoated recycled paperboard, coated recycled paperboard, tubes and cores and a diverse mix of specialty products. The company also manufactures packaging accessories and provides filling, packaging and other services for a wide range of industries. Greif also manages timber properties in the southeastern United States. The company is strategically positioned with 290 operating locations in 43 countries to serve global as well as regional customers.
Overview of Greif's 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $1.158 billion (down from $1.213 billion for the same quarter of the previous year)
- Cost of products sold: $917.6 million (down $964.6 million for the same quarter of the previous year)
- Net income attributable to Greif, Inc.: $11.4 million (down from $13.6 million for the same quarter of the previous year)
- Earnings per Class A common stock: $0.19 (down from $0.23 for the same quarter of the previous year)
- PE ratio of Greif: 37
- PE ratio of Greif: 37
- Shares in issue: 26.4 million
- Cash and cash equivalents: $72.4 million (down from $77.3 million for the same quarter of the previous year)
- Cash and equivalents per share: $2.72
- Cash and equivalents per share makes up 7.6% of the group's current stock price
- Trade accounts receivable: $640.5 million
- Trade accounts receivable makes up 11.5% of the group's total assets (we see anything above 20% as worrying)
- Inventories: $339 million (down from $358.2 million for the same quarter of the previous year)
- Inventories makes up 6.1% of the group's total assets
- Inventories makes up 6.1% of the group's total assets
- Stockholders equity in Greif: $1.083 billion
- Stockholders equity per share in Greif: $41.02
- So Greif is trading at 0.88 times its stockholders equity per share, which is well outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective the average price to book of firms in the S&P 500 is 3.7 times. Read more about the S&P 500 here
Greif's management commentary on their 2nd quarter 2020 earnings report
DELAWARE, Ohio, June 3, 2020 /PRNewswire/ -- Greif, Inc. (NYSE: GEF, GEF.B), a world leader in industrial packaging products and services, today announced second quarter 2020 results.
Pete Watson, Greif's President and Chief Executive Ocer, commented: "At Greif, we safely package and protect essential goods and materials that serve the greater needs of communities around the world. That is our purpose as a Company and a serious responsibility in which we take pride. While we are operating in a highly unprecedented time, we continue to draw strength from our 16,000 global colleagues, and I commend them for their efforts this past quarter. I would like to especially thank our front line production colleagues for their dedication during this pandemic and for their outstanding service to our customers. We are responding to COVID-19 from a position of strength, taking proactive steps to prioritize the safety and wellbeing of our colleagues, customers and suppliers while adapting to new methods to further serve customer needs. We are also advancing our strategic priorities, and during the quarter took steps to enhance our U.S. IBC reconditioning capability and published our 11th annual sustainability report.
Pete Watson, Greif's President and Chief Executive Ocer, commented: "At Greif, we safely package and protect essential goods and materials that serve the greater needs of communities around the world. That is our purpose as a Company and a serious responsibility in which we take pride. While we are operating in a highly unprecedented time, we continue to draw strength from our 16,000 global colleagues, and I commend them for their efforts this past quarter. I would like to especially thank our front line production colleagues for their dedication during this pandemic and for their outstanding service to our customers. We are responding to COVID-19 from a position of strength, taking proactive steps to prioritize the safety and wellbeing of our colleagues, customers and suppliers while adapting to new methods to further serve customer needs. We are also advancing our strategic priorities, and during the quarter took steps to enhance our U.S. IBC reconditioning capability and published our 11th annual sustainability report.
COVID-19 Pandemic Response
The health and safety of our Greif colleagues is our rst priority. The global COVID-19 pandemic remains an evolving situation and our global and regional pandemic task forces meet multiple times per week to monitor the latest updates and take action to further safeguard the health of our colleagues, customers and suppliers. The Company has implemented a variety of safety measures in response to COVID-19, including: conducting temperature screenings for personnel entering our operations; routinely cleaning high-touch surfaces; following social distancing protocols; staggering production teams where needed; prohibiting all non-critical business travel; implementing visitor protocols; and encouraging all colleagues to work from home when possible. Additionally, Greif has launched a dedicated COVID-19 micro site internally for colleagues to access Company and health authority information, guidelines, protocols and polices, including those issued by the World Health Organization and the U.S. Centers for Disease Control and Prevention. Greif's business continuity plans are designed to ensure its operations are fully capable of performing in adverse conditions in support of our customers' needs. The Company maintains a diverse supply chain and has not experienced signicant production challenges or raw material or supply disruptions. The Company is also conducting frequent customer outreach and updates in the form of letters, audio and visual calls, and virtual customer webinars to maximize communication and further enhance transparency during this global crisis.
Dividend Summary
On June 2, 2020, the Board of Directors declared quarterly cash dividends of $0.44 per share of Class A Common 6 Stock and $0.66 per share of Class B Common Stock. Dividends are payable on July 1, 2020, to stockholders of record at the close of business on June 18, 2020.
The health and safety of our Greif colleagues is our rst priority. The global COVID-19 pandemic remains an evolving situation and our global and regional pandemic task forces meet multiple times per week to monitor the latest updates and take action to further safeguard the health of our colleagues, customers and suppliers. The Company has implemented a variety of safety measures in response to COVID-19, including: conducting temperature screenings for personnel entering our operations; routinely cleaning high-touch surfaces; following social distancing protocols; staggering production teams where needed; prohibiting all non-critical business travel; implementing visitor protocols; and encouraging all colleagues to work from home when possible. Additionally, Greif has launched a dedicated COVID-19 micro site internally for colleagues to access Company and health authority information, guidelines, protocols and polices, including those issued by the World Health Organization and the U.S. Centers for Disease Control and Prevention. Greif's business continuity plans are designed to ensure its operations are fully capable of performing in adverse conditions in support of our customers' needs. The Company maintains a diverse supply chain and has not experienced signicant production challenges or raw material or supply disruptions. The Company is also conducting frequent customer outreach and updates in the form of letters, audio and visual calls, and virtual customer webinars to maximize communication and further enhance transparency during this global crisis.
Dividend Summary
On June 2, 2020, the Board of Directors declared quarterly cash dividends of $0.44 per share of Class A Common 6 Stock and $0.66 per share of Class B Common Stock. Dividends are payable on July 1, 2020, to stockholders of record at the close of business on June 18, 2020.
Greif Inc Class A (NYSE: GEF) stock price history
The image below show Greif's stock price over the last 5 years. And its not been a good time for Greif stockholders over the last 5 years. 5 years ago the stock was trading at $39.20 and its currently trading at $36.20. Thats a loss of - % suffered by Greif stockholders over the last 5 years. The stock of Greif is trading at close to the mid point between its 52 week low and 52 week high which to us is a clear indication that the short term sentiment and momentum of Greif's stock is neutral at this point in time.
Greif (NYSE: GEF) stock vs Sonoco Products (NYSE: SON)
The image below shows the stock price performance of Greif (GEF) and Sonoco Products (SON) over the last 3 years. And from the image below it is clear that Sonoco Products stock has easily outperformed the stock of Greif. The stock of Greif declined by -35.8% over the last 3 years while the stock of Sonoco products increased by 5.16% over the same time period.
Recent coverage of Greif
The extract below covers the latest earnings report from Greif as obtained from Nasdaq.com
Greif (GEF) came out with quarterly earnings of $0.95 per share, beating the Zacks Consensus Estimate of $0.81 per share. This compares to earnings of $0.81 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 17.28%. A quarter ago, it was expected that this industrial packaging company would post earnings of $0.52 per share when it actually produced earnings of $0.64, delivering a surprise of 23.08%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Greif, which belongs to the Zacks Containers - Paper and Packaging industry, posted revenues of $1.16 billion for the quarter ended April 2020, missing the Zacks Consensus Estimate by 2.54%. This compares to year-ago revenues of $1.21 billion. The company has not been able to beat consensus revenue estimates over the last four quarters.
Read the full article here
Greif (GEF) came out with quarterly earnings of $0.95 per share, beating the Zacks Consensus Estimate of $0.81 per share. This compares to earnings of $0.81 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 17.28%. A quarter ago, it was expected that this industrial packaging company would post earnings of $0.52 per share when it actually produced earnings of $0.64, delivering a surprise of 23.08%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times. Greif, which belongs to the Zacks Containers - Paper and Packaging industry, posted revenues of $1.16 billion for the quarter ended April 2020, missing the Zacks Consensus Estimate by 2.54%. This compares to year-ago revenues of $1.21 billion. The company has not been able to beat consensus revenue estimates over the last four quarters.
Read the full article here
Greif (NYSE: GEF) latest stock valuation
So based on Greif's 2nd quarter 2020 earnings released what do we value Greif's stock at? Based on the earnings reported our valuation models provides a target price (full value price) for Greif stock at $43.20 a stock. We therefore believe the stock of Greif is slightly undervalued at its current price of $36.20.
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price which in this case is $43.20. Thus a good entry point into the stock of Greif is at $38.90 or below. We expect the stock of Greif to trade in a narrow range around its current price in coming weeks and months.
We usually recommend that long term and fundamental investors look to enter a stock at least 10% below our target price which in this case is $43.20. Thus a good entry point into the stock of Greif is at $38.90 or below. We expect the stock of Greif to trade in a narrow range around its current price in coming weeks and months.
Next earnings release of Greif
It is expected that Greif will release their 3rd quarter 2020 earnings report in early September 2020