Why Greif (GEF) Stock Is Falling Today

NEW YORK (TheStreet) -- Shares of Greif  (GEF) are down by -5.51% to $47.53 at the start of trading on Monday, after the packaging company cut its fiscal 2014 earnings per share guidance to $1.98 to $2.08, from its previous forecast of $2.48 to $2.80 per share.

Greif said extra restructuring charges led to the decrease in its earnings expectations.

The company will release its 2014 third-quarter financial results on Wednesday, Aug 27 after the market closes.

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Separately, TheStreet Ratings team rates GREIF INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate GREIF INC (GEF) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 1.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Even though the current debt-to-equity ratio is 1.09, it is still below the industry average, suggesting that this level of debt is acceptable within the Containers & Packaging industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.72 is weak.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Containers & Packaging industry and the overall market, GREIF INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • GREIF INC's earnings per share declined by 11.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, GREIF INC increased its bottom line by earning $3.10 versus $2.58 in the prior year. For the next year, the market is expecting a contraction of 6.5% in earnings ($2.90 versus $3.10).
  • You can view the full analysis from the report here: GEF Ratings Report

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