Greif (GEF) Q3 Earnings: Stock Likely to Beat Estimates?

Greif, Inc. GEF is gearing up to report third-quarter 2016 results on Aug 31, after the market closes. In the last reported quarter, the company's adjusted earnings declined year over year and also missed the Zacks Consensus Estimate.

Let's see how things are shaping up for this quarter.

Factors to Consider

Greif has been successful in turning around underperforming businesses, and shedding non-core assets and closed facilities. The company completed three divestitures within a period of six months ended Apr 30, 2016. The improvement in underperforming operations, specifically in Turkey, Mexico and Vietnam, and persistent focus on the completion of commercial initiatives, will boost results.

The company's results in the second half of the fiscal year have been historically stronger due to seasonality, related particularly to the agricultural markets. This will also likely reflect in the third quarter performance. Moreover, Greif continues to focus on headcount reduction and slashing entertainment and travel budget by increasing video conferencing usage and eliminating all non-sales-related travel. These actions will be accretive to the company's earnings in the to-be-reported quarter.

Earnings Whispers

Our proven model shows that Greif is likely to beat earnings because it has the right combination of the two key ingredients.

Zacks ESP: Greif's Earnings ESP stands at +4.17%. This is because the company's Most Accurate estimate is pegged at 75 cents, while the Zacks Consensus Estimate stands at 72 cents. A favorable ESP serves as a meaningful and leading indicator of a likely positive surprise.

Zacks Rank: Greif currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a significantly higher chance of beating earnings. Conversely, the Sell-rated stocks (Zacks Rank #4 or #5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

The combination of Greif's favorable Zacks Rank and positive ESP makes us reasonably confident of an earnings beat this quarter.

Surprise History

Greif outpaced the Zacks Consensus Estimate in three out of the trailing four quarters with an average positive surprise of 26.28%. In the last reported quarter, however, the company posted a negative earnings surprise of 17.54%.

GREIF INC Price and EPS Surprise

 

GREIF INC Price and EPS Surprise | GREIF INC Quote

Stocks That Warrant a Look

Here are some other stocks that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter:

AO Smith Corp. AOS has an Earnings ESP of +2.22% and a Zacks Rank #2.

Codexis, Inc. CDXS has an Earnings ESP of +7.14% and a Zacks Rank #3.

CECO Environmental Corp. CECE has an Earnings ESP of +5.00% and a Zacks Rank #3.

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