Greif, Inc. GEF is slated to report fourth-quarter fiscal 2015 results before the opening bell on Dec 10, 2015. The company posted a negative earnings surprise of 9.09% in the last quarter, Greif has delivered an average positive surprise of 6.08% in the trailing four quarters.
Let's see how things are shaping up for this announcement.
Factors to Consider
Greif expects fiscal 2015 revenues to be lower year over year due to persistent currency volatility, weak global manufacturing environment, continued deflationary raw material costs as well as a stronger dollar. However, Greif increased its adjusted earnings per share guidance for fiscal 2015 to the band of $1.85 to $1.95 due to expected benefits from the execution of its transformation initiatives, including SG&A cost reduction actions.
In the fourth quarter, however, expected accrual of professional fees related to the SG&A reduction efforts and increased medical expense related to experience trends throughout the year will offset the benefits from these cost reduction actions.
Greif has been progressing with its strategic transformation plan that will allow it to better align resources with the needs of customers, improve returns on invested capital and better reward its shareholders. However, foreign currency volatility, lower oil prices, headwinds in Latin America, North America and Europe will impact Greif’s results in 2015.
Earnings Whispers
Our proven model does not conclusively show that Greif is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.
Zacks ESP: Greif’s ESP is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are at 49 cents.
Zacks Rank: Greif’s Zacks Rank #3 when combined with a 0.00% ESP, makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Alamo Group, Inc. ALG has an earnings ESP of +3.16% and a Zacks Rank #3.
Brady Corp. BRC has an earnings ESP of +4.55% and a Zacks Rank #1.
Deere & Company DE has an earnings ESP of +1.45% and a Zacks Rank #3.
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