WestRock (NYSE:WRK) Q4 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

WestRock Company (NYSE:WRK) is scheduled to report Q4 earnings results before markets open for trading on November 5, 2020.

The company is expected to report earnings of $0.68/share on revenue of $4.372 billion. The consensus earnings per share (EPS) of $0.68/share is based on a poll of 15 analysts and represents a decline in eps of −45.5% over the same quarter last year, when the company reported earnings of $1.24/share.

The revenue forecast of $4.372 billion based on a poll of 12 analysts implies a year-over-year (YoY) decline in revenue of −6.0%. Last year the company reported $4.652 billion in revenue for the quarter.

Expected to report EPS contraction of −45.5% for Q4, 2020
Metric Expected Prior Year YoY Change
Revenue $4,371.66 $4,651.60 −6.0%
EPS $0.68 $1.24 −45.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarter.

What are your expectations from WestRock Company for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2020 $0.43 $0.76 77.2% Beat
Q2, 2020 $0.61 $0.67 9.6% Beat
Q1, 2020 $0.59 $0.58 −1.9% Missed
Q4, 2019 $1.19 $1.24 4.0% Beat
Q3, 2019 $1.01 $1.11 10.1% Beat
Q2, 2019 $0.61 $0.80 31.3% Beat
Q1, 2019 $0.78 $0.83 6.2% Beat
Q4, 2018 $1.25 $1.29 3.5% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 7.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $27.82 $29.84 7.3% Increase
May 5, 2020 $30.31 $24.70 −18.5% Decline
January 30, 2020 $40.61 $39 −4.0% Decline
November 7, 2019 $39.24 $39.75 1.3% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.80, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.80 implies a 0.3% chance of earnings manipulation.

Fundamentals And Technical Analysis

WestRock Company is currently trading at $36.98/share, down −3.5% for the day. The company is trading at approximately 83.6% of its 52-week high of $44.39/share. The company’s stock price is up 23.9% since the last earnings report and down −8.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 52.36 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:WRK Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 12.38 and a forward P/E multiple of 14.42.

WestRock Company’s current share price also implies a price-to-book (P/B) multiple of 0.82. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q3
Period End Date June 30, 2020
Stock Price (Current) $36.98
P/E Ratio 12.4x
P/E Ratio (Fwd) 14.4x
PEG Ratio −1.8
Total Debt / Total Capital 51.9%
Levered Free Cash Flow $997.1 million
EV / EBITDA 7.2x

Finbox

WestRock Company is a mid-cap stock with a market capitalization of $9.944 billion and a total enterprise value of $20.429 billion. The company operates in the Materials sector and the Containers & Packaging industry.

WestRock Company manufactures and sells paper and packaging solutions for the consumer and corrugated markets in North America, South America, Europe, Asia, and Australia. The company’s Corrugated Packaging segment produces containerboards, corrugated sheets, corrugated packaging, and preprinted linerboards for consumer and industrial products manufacturers, and corrugated box manufacturers. It also provides structural and graphic design, engineering services and custom, and automated packaging machines; and operates recycling facilities that collect, sort, grade, and bale recovered paper. The company’s Consumer Packaging segment manufactures and sells folding and beverage cartons that are used to package food, paper, beverages, dairy products, tobacco, confectionery, health and beauty, other household consumer, and commercial and industrial products; and express mail packages for the overnight courier industry. It also offers inserts and labels, as well as rigid packaging and other printed packaging products; and secondary packages and paperboard packaging for over-the-counter and prescription drugs. In addition, this segment manufactures and sells solid fiber and corrugated partitions, and die-cut paperboard components; temporary and permanent displays; and lithographic laminated packaging products, as well as provides contract packing services. Its Land and Development segment sells real estate primarily in the Charleston, South Carolina region. WestRock Company is based in Atlanta, Georgia.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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