Greif, Inc. is strong on profits

Exchange: NYSE

Sector: Consumer Goods

Industry: Packaging & Containers

Entry strategy

Price: $53—$56

Stop-loss: under $52.10

Take profit: minimal aim — $66, then $86—$89

Investment horizon: 1 year and more

Company details

Greif, Inc. manufactures and sells industrial packaging products and provides related services around the world. Earlier the company was known as Greif Bros. Corporation and changed its name to Greif, Inc. in 2001. Greif was founded in 1877. It’s headquartered in Delaware, Ohio.

The corporation operates in four segments: «Rigid industrial packaging», «Paper packaging», «Flexible packaging products» and services for land management.

The issuer’s capitalization is about $ 2.6 billion (group + Mid).

Company financial performance

On August 28, 2018, Greif Inc. published its quarterly financial results (see Table 1). The report showed an increase in sales revenue (+ 5.01%) and earnings per share (+ 53.3%) in the second quarter.

Table 1. Quarterly financial results of Greif Inc. ($GEF) from Q2 2017 to Q2 2018. Source: MarketWatch — Open original image

    Greif, Inc. stocks in the last 3 months were stronger than the Packaging & Containers industry average. There are a number of reasons for this:

  • In accordance with the company’s development strategy, the processes of working with customers are improving.
  • The company is actively increasing the value of its business through effective mergers and acquisitions.
  • Greif benefits from the US tax reform and the inflow of investment capital into the country.

Good news for investors is the growth in the size of quarterly dividends. On August 28, 2018, the Board of Directors of Greif, Inc. approved dividends per class A share ($GEF) for the third quarter in the amount of $0.44 (approximately 0.8% of the share price). This is by 4.8% higher than dividends for the second quarter. The register of shareholders will be closed on September 17, 2018.

According to the company’s management, the increase in dividends is due to the expectation of strong financial results for the second half of 2018.

In the fourth quarter of the year, benefits from revaluation of raw materials for production and benefits from rising prices for containers are expected. This should have a significant positive impact on the profit and operating cash flow of the corporation.

    However, there are several negative factors that can slow the growth of financial results Greif Inc. in 2018:

  • the potential drop in demand for products and services in China due to trade wars;
  • rising steel prices;
  • risks of further strengthening of the US dollar.

Technical analysis (trading plan)

Graph 1. Technical analysis of Greif Inc. ($GEF) stock. Source: TradingView — Open original image

Also published on Medium.