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Sealed Air (SEE) came out with quarterly earnings of $0.79 per share, beating the Zacks Consensus Estimate of $0.66 per share. This compares to earnings of $0.77 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 19.70%. A quarter ago, it was expected that this packaging company would post earnings of $0.64 per share when it actually produced earnings of $0.83, delivering a surprise of 29.69%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Sealed Air, which belongs to the Zacks Containers - Paper and Packaging industry, posted revenues of $1.35 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.19%. This compares to year-ago revenues of $1.38 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Sealed Air shares have added about 1.6% since the beginning of the year versus the S&P 500's gain of 24.3%.

What's Next for Sealed Air?

While Sealed Air has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for Sealed Air: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $0.69 on $1.39 billion in revenues for the coming quarter and $2.93 on $5.4 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Containers - Paper and Packaging is currently in the bottom 35% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Another stock from the same industry, Pactiv Evergreen Inc. (PTVE), has yet to report results for the quarter ended September 2024. The results are expected to be released on November 12.

This company is expected to post quarterly earnings of $0.33 per share in its upcoming report, which represents a year-over-year change of +3.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Pactiv Evergreen Inc.'s revenues are expected to be $1.34 billion, down 2.9% from the year-ago quarter.

Zacks Investment Research

Sealed Air Corporation SEE is scheduled to report third-quarter 2024 results on Nov. 7, before the opening bell.

The Zacks Consensus Estimate for SEE’s third-quarter revenues is pegged at $1.34 billion, indicating a 2.8% decline from the year-ago reported figure.

The consensus estimate for earnings is pegged at 66 cents per share. The Zacks Consensus Estimate for SEE’s third-quarter earnings has been unchanged in the past 60 days. The estimate indicates a year-over-year decline of 14.3%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

SEE’s Solid Earnings Surprise History

Sealed Air’s earnings beat the Zacks Consensus Estimates in the trailing four quarters, the average surprise being 35.3%.

What the Zacks Model Indicates for Sealed Air

Our model does not conclusively predict an earnings beat for Sealed Air 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. That is not the case here.

Earnings ESP: Sealed Air has an Earnings ESP of 0.00%. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank of 3.

Factors Likely to Have Shaped SEE’s Q3 Performance

Sealed Air’s Protective segment experienced lower volumes for 10 consecutive quarters. The company expects the weakness to persist throughout 2024 and continue in 2025. For the Protective segment, our model indicates a volume decline of 7% for the third quarter.

After witnessing lower volumes for seven quarters, the Food segment’s volumes returned to growth in the first quarter of 2024, driven by solid demand for bags, case-ready and automated solutions. The impacts of this are expected to get reflected in the third-quarter segment results as well. Volumes for the segments are also likely to have benefited from the demand for automated equipment and sustainable packaging solutions. Our model projects the Food segment’s volumes to rise 3% year over year in the third quarter.

Nonetheless, higher volumes in the segment are likely to have been offset by continued weakness in the Protective segment this year.

Our model estimate for the Food segment’s third-quarter net sales is pegged at $893 million, suggesting a fall of 0.1% from the prior-year period’s reported figure. The impacts of pricing (negative 2.5%) are likely to have offset the gains from higher volumes and dented the segment’s top line. Our estimate for the segment’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) stands at $196 million, indicating a year-over-year rise of 0.8%.

Our estimate for the Protective segment’s third-quarter net sales is $442 million, implying a year-over-year dip of 9.4%. This is mainly due to the volume decline and pricing impacts of negative 2.3%. Our estimate for the segment’s adjusted EBITDA is pegged at $79 million, suggesting a year-over-year decrease of 16.8%.

Sealed Air’s overall volumes are expected to dip 0.5%, per our model. We expect pricing impacts of 2.4% for the quarter.

Savings from the company’s Reinvent SEE Strategy initiatives have been driving productivity gains and mitigating supply-chain challenges. This is expected to have driven the operating margin performance in the September-ended quarter.

Sealed Air’s Price Performance

In the past year, shares of Sealed Air have gained 10.6% compared with the industry’s 27.1% growth.

Stocks to Consider

Here are some stocks with the right combination of elements to post an earnings beat in their upcoming releases.

Osisko Gold Royalties OR, which currently carries a Zacks Rank of 2, is expected to report third-quarter 2024 results later this month. OR has an Earnings ESP of +1.59%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for OR’s earnings for the quarter is pegged at 11 cents per share, indicating 22% year-over-year growth. It has a trailing four-quarter average earnings surprise of 4.1%.

Tenaris S.A. TS has an Earnings ESP of +10.22% and a Zacks Rank of 3 at present. The company is scheduled to release third-quarter 2024 results on Nov. 6.

The Zacks Consensus Estimate for TS’s quarterly earnings is pegged at 63 cents per share, suggesting a 30.8% year-over-year decline. It has a trailing four-quarter average earnings surprise of 11.6%.

Woodward, Inc. WWD has an Earnings ESP of +1.86% and a Zacks Rank of 3 at present. The company is slated to release third-quarter 2024 results on Nov. 25.

The Zacks Consensus Estimate for WWD’s earnings for the quarter is pegged at $1.22 per share, implying an 8.2% year-over-year dip. It has a trailing four-quarter average earnings surprise of 18.5%.

Zacks Investment Research