Greif Downgraded to Sell - Analyst Blog

On Mar 28, 2014, Zacks Investment Research downgraded Greif, Inc. GEF to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold).

Why the Downgrade

Greif's estimates underwent sharp downward revisions following its weak first-quarter fiscal 2014 earnings and fiscal 2014 guidance reported on Feb 27. Although Greif's adjusted earnings improved 11% year over year to 44 cents per share in the quarter, it missed the Zacks Consensus Estimate of 53 cents.

Record first-quarter results from the Paper Packaging segment were overshadowed by the adverse impact of weather conditions in North America and currency devaluations which impacted Greif's Latin American operations in Brazil, Argentina and Venezuela as well as its Middle Eastern and South African operations.

For fiscal 2014, Greif anticipates a gradual global economic recovery, which should result in moderate sales and volume improvement. Raw material costs are expected to be higher. Greif is planning to implement additional restructuring activities for its underperforming operations. This will result in restructuring charges of approximately $25 million. Furthermore, foreign exchange volatility as well as social and political unrest remains headwinds.

The company, thus witnessed downward estimate revisions which led to the rank downgrade. Over the last 30 days, 5 out of 7 estimates for 2014 have gone down with the Zacks Consensus Estimate moving down a penny to $3.09 per share for 2014.

Other Stocks to Consider

Some better-performing stocks in the industry that are worth a look include Ball Corporation BLL, Packaging Corporation of America PKG and Bemis Company, Inc. BMS. While Ball Corporation and Packaging Corporation sport a Zacks Rank #1 (Strong Buy), Bemis carries a Zacks Rank #2 (Buy).