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WestRock (WRK) to Report Q4 Earnings: What's in the Offing?

WestRock Company WRK is scheduled to report fourth-quarter fiscal 2021 results (ended as of Sep 30, 2021) on Nov 9, before the opening bell.

Q4 Estimates

The Zacks Consensus Estimate for the fiscal fourth-quarter revenues is pegged at $4.9 billion, suggesting growth of 10.9% from the year-ago period. The same for earnings per share stands at $1.17, indicating a year-over-year jump of 60.3%. The Zacks Consensus Estimate for the company’s fiscal fourth-quarter earnings has moved north over the past 30 days.

Q3 Performance

WestRock’s adjusted earnings per share and revenues both beat the Zacks Consensus Estimate and increased year over year. The company has a trailing four-quarter average earnings surprise of 2.63%.

Key Factors to Note

Packaging products are essential for the distribution of food, beverage and pharmaceutical products. The pandemic-induced stay-at-home orders and restrictions worldwide have fueled demand for online grocery, beverage and pharmaceuticals delivery services, which, in turn, is driving e-commerce growth. Consequently, the company’s Consumer Packaging segment is anticipated to have benefited from the elevated demand for the packaging of food, beverages, household cleaning and liquid packaging during the fiscal fourth quarter.

However, waning demand across few of WestRock’s businesses due to the pandemic might have weighed on the company’s performance. Demand in food service has been impacted by the uncertainty in the timing of reopening of restaurants, schools and other services. Commercial print demand has also been strained due to the limited public events, and reduced retail and direct mail advertising. Luxury goods have also been hit hard. These factors are expected to have dented the company’s fiscal fourth-quarter performance. Also, maintenance downtime across the North American Corrugated Packaging and Consumer Packaging segment as well as escalating recycled fiber, virgin fiber and energy costs might have unfavorably impacted the company’s margin during the fiscal fourth quarter.

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

The Zacks Consensus Estimate for the Consumer Packaging segment’s quarterly revenues is pegged at $1,785 million, suggesting growth of 9.7% from the prior-year period. The segment’s adjusted EBITDA is estimated to have been up 28%, year over year, to $285 million.

For the Corrugated Packaging segment revenues, the Zacks Consensus Estimate is pinned at $3,250 million, calling for growth of 12% from year-ago quarter. Improved box shipment and increased demand from the distribution, industrial and agricultural customers are likely to have aided the segment. The segment’s adjusted EBITDA is anticipated to have been up 19%, year over year, to $610 million.

WestRock Company Price and EPS Surprise

WestRock Company price-eps-surprise | WestRock Company Quote

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 -0.79%.

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

WestRock’s shares have gained 24.7% over the past year, compared with the industry’s growth of 26%.

Image Source: Zacks Investment Research

Stocks Worth a Look

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

Sociedad Quimica y Minera SQM, a Zacks #1 Ranked stock, has an Earnings ESP of +0.33%.

MP Materials Corp. MP has an Earnings ESP of +20.37% and carries a Zacks Rank of 2, currently.

The Chemours Company CC has a Zacks Rank #2 and an Earnings ESP of +1.26%, at present.


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