A Look at WestRock’s 4Q16 Performance

WestRock (WRK) has a market cap of $11.4 billion. It fell 2.3% to close at $45.27 per share on November 7, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.0%, -2.7%, and 2.2%, respectively, on the same day. WRK is trading 2.7% below its 20-day moving average, 4.2% below its 50-day moving average, and 11.5% above its 200-day moving average.

The iShares Global Timber & Forestry ETF (WOOD) invests 4.0% of its holdings in WestRock. The ETF tracks the 25 largest publicly listed companies that own or manage forests and timberlands. The YTD price movement of WOOD was 4.2% on November 7. The market caps of WestRock’s competitors are as follows:

• International Paper (IP) — $18.5 billion
• Packaging Corporation of America (PKG) — $7.6 billion
• Graphic Packaging (GPK) — $4.0 billion

WestRock reported fiscal 4Q16 net sales of $3.61 billion, a fall of 0.12% from the net sales of $3.62 billion in fiscal 4Q15. Sales from the Corrugated Packaging segment rose 0.83%, and sales from the Consumer Packaging segment and the Land and Development segment fell 1.2% and 2.9%, respectively, between fiscal 4Q15 and fiscal 4Q16. The company’s gross profit margin expanded 90 basis points.

Its net income and EPS (earnings per share) fell to -$92.0 million and -$0.37, respectively, in fiscal 4Q16, compared with $115.8 million and $0.44 in fiscal 4Q15. It reported adjusted EPS from continuing operations of $0.71 in fiscal 4Q16.

In fiscal 2016, WRK reported net sales of 14.2 billion, a rise of 27.4% YoY (year-over-year). The company’s gross profit margin expanded 30 basis points, and its operating margin narrowed 470 basis points in fiscal 2016.

Its net income and EPS fell to -$396.3 million and -$1.54, respectively, in fiscal 2016, compared with $507.1 million and $2.93 in fiscal 2015. It reported adjusted EPS from continuing operations of $2.53 in fiscal 2016.

WRK’s cash and cash equivalents rose 64.1%, and its inventories fell 7.0% in fiscal 2016. Its current ratio fell to 1.8x, and its debt-to-equity ratio rose to 1.3x in fiscal 2016, compared with 1.9x and 1.2x, respectively, in fiscal 2015.

WestRock has declared a quarterly dividend of $0.40 per share on its common stock. The dividend will be paid on November 30, 2016, to shareholders of record at the close of business on November 21, 2016. In the next and final part of this series, we’ll look at GoPro (GPRO).