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WestRock (WRK) Hits 52-Week High: What's Driving the Stock?

Zacks Equity Research
Updated

Shares of WestRock Company WRK scaled a 52-week high of $62.61 on Nov 30, eventually closing lower at $62.41. The gain is driven by WestRock’s solid performance in fiscal 2017, encouraging outlook for fiscal 2018, as well as its focus on acquisitions.

The company has a market cap of $15.7 billion. Over the last three months, its average volume of shares traded is approximately 1.5M. Also, WestRock surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive earnings surprise of 10.03%.

Price Performance

Notably, the stock has gained 22.6% in a year’s time, higher than the S&P 500’s gain of 20.2%. WestRock has also outperformed the industry’s gain of 18.1% during the same time frame with respect to price performance.



Favorable Rank & Style Score

This Zacks Rank #3 (Hold) company has an impressive VGM Score of A. In this V stands for Value, G for Growth and M for Momentum, and the score is a weighted combination of these three scores. Such a score eliminates the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

Our research shows that stocks with Style Scores of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities.

Westrock Company Price and Consensus

 

Westrock Company Price and Consensus | Westrock Company Quote

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What Led to the 52-Week High?

WestRock’s shares have gained nearly 5% since it reported fourth-quarter and fiscal 2017 results on Nov 2. Its adjusted earnings of 87 cents per share in the fiscal fourth quarter beat the Zacks Consensus Estimate by a margin of 7%.  Sales also beat the consensus estimates and rose 12.4% year over year.

Backed by the overall industry conditions and positive volume and pricing dynamics, the company anticipates strong growth in fiscal 2018. Net sales growth is projected to be up approximately 10% year over year, translating to revenues of around $16.3 billion.

Notably, WestRock remained active on the acquisition front during fiscal 2017. The company acquired Multi Packaging Solutions International Limited — a leading global provider of print-based specialty packaging solutions — which will strengthen the company’s differentiated portfolio of paper and packaging solutions, along with expanding presence in attractive end markets. WestRock also acquired certain operations of U.S. Corrugated Holdings, Inc.

In August 2017, WestRock acquired Hanna Group Pty Ltd, one of Australia’s leading providers of folding cartons to a variety of markets. This buyout will expand WestRock’s consumer packaging portfolio as well as fortify its established and growing packaging business in Australia.

In a bid to tap the growing demand for corrugated packaging, WestRock has bought the assets of Island Container Corp. and Combined Container Industries LLC — two independent producers of corrugated boxes, sheets and point-of-purchase displays.

WestRock also continues to execute well on disciplined capital-allocation strategy. The company bought back $93 million of stock in fiscal 2017. During the fiscal, it paid $403 million as dividends. In October 2017, WestRock hiked its annual dividend by 7.5% to $1.72 per share. Meanwhile, the company also invested $779 million in capital to maintain and improve manufacturing assets.

The above-mentioned tailwinds raised investors’ optimism on the stock and are anticipated to boost the company’s share price in the days ahead.

Stocks to Consider

Better-ranked stocks in the same space include Sappi Limited SPPJY, Stora Enso Oyj SEOAY and UPM-Kymmene Oyj UPMKY. All three stocks carry a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sappi Limited has a long-term earnings growth rate of 7.6%. Its shares have been up 10.3% year to date.

Stora Enso has a long-term earnings growth rate of 9.6%. Its shares have gained 43.7% during in the year so far.

UPM-Kymmene has a long-term earnings growth rate of 5.1%. Its shares have gained 22.2% during the same time frame.

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Sappi Ltd. (SPPJY) : Free Stock Analysis Report
 
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