As we close out the week, let’s quickly review the latest earnings results from our Value Authority companies.
Phibro Aninal Health (PHAC) reported fiscal second-quarter EPS of $0.34, vs. $0.37 last year, which was $0.04 better than expectations. Revenues were up 5%, and encouragingly, gross profit was up 9% as the company’s price increases exceeded their costs for producing products. However, investments for growth and environmental expenses caused profits to decline.
The company reiterated EPS guidance for the fiscal year of $1.20 to $1.30, and I think the high end is more plausible after the better-than-expected results this quarter. EPS should improve to $1.40 in the next fiscal year, and at just over 11X this estimate, the stock remains attractively valued. PAHC remains a buy below $16. My target is $20.
Sonoco Products (SON) had another strong quarter, as the company continues to benefit from price increases and the Ball Metalpack acquisition. Fourth-quarter EPS of $1.27, vs. $0.99 last year, was on a 18% increase in revenues. Results were $0.06 better than expectations.
The company gave guidance for 2023 EPS of $5.80 to $5.90, which is lower than the $6.48 per share earned in 2022 but still slightly above the estimate for 2023 heading into the quarter. The economy remains a risk for SON, and the stock is discounting a far greater decline in earnings than current guidance. I believe that as investors gain confidence in the earnings this year, the stock should do very well. SON is a buy below $65. My target is $75. The 3.3% dividend yields as to the attraction of the shares.
Newell Products (NWL) is off its lows but still nearly 3% lower today after reporting fourth-quarter earnings. EPS of $0.16, vs. $0.42 last year, on a 9% decline in core sales was $0.05 better than expectations. However, EPS guidance for 2023 of $0.95 to $1.08 on a decline in revenues between 6% to 8% was below expectations for $1.42 in earnings.
Also hitting the stock today was the surprise retirement of CEO Ravi Saligram, who has done a good job streamlining the company’s product line and improving the company’s balance sheet. However, second in command Chris Peterson will take over the top spot, so the Board of Directors remains comfortable with the company’s strategy despite the current slump caused by retailers reducing inventories.
Still, many probably assume that the forecast is overly negative and is being used to set Mr. Peterson up for success by exceeding expectations. On the flip side, others likely think the report makes one more cautious on the shares. I want to give the stock some more time, but I am lowering my buy under for NWL to $12 and my target to $17.