MeadWestvaco Beats Expectations But Takes A Step Back Anyway

MeadWestvaco (NYSE: MWV  ) reported earnings on July 30. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended June 30 (Q2), MeadWestvaco met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew slightly. Non-GAAP earnings per share contracted significantly. GAAP earnings per share shrank significantly.

Margins dropped across the board.

Revenue details
MeadWestvaco logged revenue of $1.43 billion. The 10 analysts polled by S&P Capital IQ expected sales of $1.45 billion on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.37. The 12 earnings estimates compiled by S&P Capital IQ predicted $0.28 per share. Non-GAAP EPS of $0.37 for Q2 were 20% lower than the prior-year quarter's $0.46 per share. (The prior-year quarter included $0.06 per share in earnings from discontinued operations.) GAAP EPS of $0.39 for Q2 were 22% lower than the prior-year quarter's $0.50 per share. (The prior-year quarter included $0.06 per share in earnings from discontinued operations.)

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 18.3%, 500 basis points worse than the prior-year quarter. Operating margin was 7.2%, 350 basis points worse than the prior-year quarter. Net margin was 5.0%, 120 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $1.50 billion. On the bottom line, the average EPS estimate is $0.54.

Next year's average estimate for revenue is $5.68 billion. The average EPS estimate is $1.36.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 87 members out of 107 rating the stock outperform, and 20 members rating it underperform. Among 48 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 41 give MeadWestvaco a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on MeadWestvaco is outperform, with an average price target of $37.33.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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