Market Overview

D.A. Davidson Takes A Look At Greif's Upside Surprise Earnings Release

D.A. Davidson Takes A Look At Greif's Upside Surprise Earnings Release
Related GEF
10 Notable Stocks Trading Ex-Dividend Thursday, September 15
Benzinga's Top Upgrades

Shares of Greif, Inc. (NYSE: GEF) climbed more than 5 percent to touch a new 52-week high of $44.97 following its $0.19 third quarter EPS beat and upbeat outlook. But, D.A. Davidson said the upside surprise to third-quarter earnings is not as large as headlines suggest, as the earnings were boosted by lower taxes.

Greif reported third-quarter EPS before special items of $0.91, ahead of the brokerage's $0.70 estimate and consensus of $0.72. Greif's earnings benefited significantly from a very low tax rate in the quarter (7.1 percent vs. brokerage's 39 percent estimate), which is estimated to have added $0.17 in earnings.

Gross margin expands 300bp year-over-year and 20bp sequentially to 20.9 percent. This follows second quarter gross margin expansion of 90bp year-over-year and 110bp sequentially.

Related Link: Enova International A Leader, An Innovator And A Buy, Says Jefferies

"Despite a struggling top line, gross margins have continued to improve, making us more confident that our full year 20.2 percent gross margin estimate in 2016 and 21.2 percent current estimate for 2017 are attainable," analyst Steven Chercover wrote in a note.

In addition, Greif raised and narrowed its FY16 EPS guidance range to $2.36–$2.56 (previously $2.20–$2.46). With combined EPS of $1.78 through three quarters, the midpoint of the FY16 guidance implies fourth-quarter EPS of $0.68, below the brokerage's $0.76 estimate, but essentially in line with consensus at $0.69.

Chercover has a Buy rating and $44 price target on the stock.

At time of publication, shares of Greif were up 5.98 percent and trading above the price target at $45.18.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for GEF

Sep 2016Bank of AmericaUpgradesNeutralBuy
Sep 2016DA DavidsonDowngradesBuyNeutral
Jun 2016BMO CapitalDowngradesOutperformMarket Perform

View More Analyst Ratings for GEF
View the Latest Analyst Ratings

Posted-In: Analyst Color Earnings Long Ideas News Guidance Price Target Reiteration Analyst Ratings Best of Benzinga


Related Articles (GEF)

View Comments and Join the Discussion!