The 10-second takeaway
For the quarter ended June 30 (Q3), Rock-Tenn met expectations on revenues and missed estimates on earnings per share.
Compared to the prior-year quarter, revenue increased significantly and GAAP earnings per share expanded.
Gross margins contracted, operating margins shrank, and net margins grew.
Rock-Tenn logged revenue of $2.30 billion. The nine analysts polled by S&P Capital IQ anticipated revenue of $2.31 billion on the same basis. GAAP reported sales were 67% higher than the prior-year quarter's $1.38 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.95. The 12 earnings estimates compiled by S&P Capital IQ anticipated $1.02 per share. GAAP EPS were $0.81 for Q3 versus -$0.60 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 15.6%, 380 basis points worse than the prior-year quarter. Operating margin was 5.7%, 320 basis points worse than the prior-year quarter. Net margin was 2.5%, 470 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $2.45 billion. On the bottom line, the average EPS estimate is $1.34.
Next year's average estimate for revenue is $9.30 billion. The average EPS estimate is $4.44.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 184 members out of 196 rating the stock outperform, and 12 members rating it underperform. Among 40 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 37 give Rock-Tenn a green thumbs-up, and three give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Rock-Tenn is outperform, with an average price target of $73.64.
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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 owns shares of Rock-Tenn. 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.