What is the Reason for Crown Holding's (CCK) 2% Share Loss Since the Q3 earnings Report?

What is the Reason for Crown Holding's (CCK) 2% Share Loss Since the Q3 earnings Report?

Crown Holdings, Inc. CCK, have have seen a 2% shares loss since the report of the last earnings over a month ago, which has led to an underperformance in the market.

It is still unclear if the next earnings of the stock will be released as a result of the current negative trend, or if a breakout is imminent. But let’s have a swift peek-in at the most recent released earnings reports, so that we can have a better grasp on the issue.

Q3 Earnings report for Crown Holdings – Revenues Beat but Earnings in line

Crown holdings delivered an adjustment in earnings of $1.41 per share in the third quarter of 2017, which saw a 6% year-over-year improvement. The earnings fell in the management’s guidance range of $1.35-$1.45.

Earnings were reported to be 1% higher than the previous quarter at $1.32 per share from $1.31.

The quarter also witnessed a net sales increase to $2,468 million (6% year-on-year rise). Revenues beat the  $2,411 million Zacks Consensus Estimate. These improvements could be as result of higher costs of materials being passed onto customers, and improved can volumes of food, aerosol and global beverages.

Products costs also catapulted to $1,956 million, a year-over-year increase of 6.4%. While a 30 basis points (bps) contraction of gross margin to 20.7% was reported, gross profit, however, soared to $512 million at 5% in the quarter.

In operations, expenses of sales and administration were stagnant at $90 million; a 7% year-on-year advancement to $359 million of adjusted segment operation income was realised in the quarter; and operating margin income expanded 10bps from 14.4% in the previous-year quarter to 14.5%.

How Segments Performed

Sales for the North-American food segment witnessed a year-on-year growth of 0.5% to $19 million, but operating returns remained the same at $23 million.

The Americas Beverage segment saw a net sales increase of 1.5% to $763 million from $752 million from the quarter of the previous year. The operating income also saw a meagre 1% increment within the same time frame, from $130 million to $132 million.

The European food segment saw a spike in revenues to $639 million – a year-over-year growth of 3%. Earnings in operation also soared by 2% from the previous year from $94 million to $96 million.

Operating income for the segment of European Beverages increased by 1% ($78 million) and sales rose to $428 million (a 2% increase).

Last in the segments, the Asia specific segments witnessed no growth in both sales revenues ($300 million) and operating income ($40 million).

Financial update

As at the end of the third quarter, the cash and cash equivalents owned by Crown Holdings decreased from $526 million in the previous year’s third quarter to $374 million in 2017.Operating cash flow also reduced to $489 million from $490 million.

Also, adjusted free cash flow as at Sep. 30, 2017 was $206 million, higher than that of the previous year which was $154 million. Crown holdings had a debt increase from $5.0 billion in the previous year quarter to $5.1 billion as at the end of the 2017 third quarter.

During the 2017 fiscal period, Crown Holdings have shelled out $339 million to repurchase up to 6.2 million of shares.

Outlook

The company is presently expecting adjusted diluted earnings to fall in the region of $3.98-$4.03 per share in 2017. However, the projection for those earnings per share for the fourth quarter is in the range of 75-80 cents.

Have Analysts made estimates since then?

No analyst have issued any estimate revision for the last month.

Zacks VGM score and Rank

In general, the aggregate VGM score for Crown Holding’s stock is B. This is the score to be interested in if you don’t want to focus on strategy. The seperate scores however are:

Value – A

Growth – C

Momentum – C

The stock has a Zack rank of #3.

Leave a reply

Your email address will not be published. Required fields are marked *