The 10-second takeaway
For the quarter ended March 31 (Q2), Rock-Tenn 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 expanded significantly. GAAP earnings per share expanded significantly.
Margins grew across the board.
Rock-Tenn logged revenue of $2.32 billion. The 11 analysts polled by S&P Capital IQ looked for a top line of $2.35 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 came in at $1.12. The 16 earnings estimates compiled by S&P Capital IQ predicted $1.05 per share. Non-GAAP EPS of $1.12 for Q2 were 15% higher than the prior-year quarter's $0.97 per share. GAAP EPS of $4.45 for Q2 were much higher than the prior-year quarter's $0.44 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 16.6%, 80 basis points better than the prior-year quarter. Operating margin was 6.4%, 70 basis points better than the prior-year quarter. Net margin was 14.0%, much better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $2.45 billion. On the bottom line, the average EPS estimate is $1.68.
Next year's average estimate for revenue is $9.63 billion. The average EPS estimate is $6.34.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 186 members out of 199 rating the stock outperform, and 13 members rating it underperform. Among 52 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 48 give Rock-Tenn a green thumbs-up, and four 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 $98.04.
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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 Company. 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.