Silgan Holdings (SLGN) Reports Next Week: What to Expect

Wall Street is expecting flat earnings compared to the same quarter last year on higher revenue when Silgan Holdings (SLGN) reports results for the quarter ended September 2021. While this widely known consensus forecast is important for assessing the company’s earnings situation, a strong factor that could affect its stock price in the near term is how well actual results stack up to those estimates.

Shares could rise if these key numbers beat expectations in the upcoming earnings report, which is due on October 27. On the other hand, if they don’t meet expectations, the stock could fall.

While management’s discussion of business conditions during the earnings call will largely determine the sustainability of the immediate price change and future earnings expectations, it’s worth having partial insight into the likelihood of a positive EPS surprise.

Zacks Consensus Estimate

The packaging products supplier is expected to post quarterly earnings of $1.04 per share in its upcoming report, which would represent no change from the prior-year quarter.

Revenue is expected to be $1.62 billion, up 8.9% from the year-ago quarter.

Estimate the trend of change

The consensus EPS estimate for the quarter has been revised 1.84% upwards over the past 30 days to the current level. This is broadly a reflection of how the covering analysts collectively have re-evaluated their initial estimates during this period.

Investors should note that the aggregate change does not necessarily reflect the direction of each lead analyst’s estimate revisions.

Price, consensus and EPS surprise

Whisper about earnings

Revisions to estimates prior to a company’s earnings release provide an indication of business conditions in the period in which the earnings are expected to be released. Our proprietary surprise prediction model, the Zacks Earnings ESP, is based on this insight.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is a newer revision of the Zacks Consensus EPS estimate. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Thus, a positive or negative Earnings ESP reading theoretically indicates a likely deviation of actual earnings from consensus estimates. However, the predictive power of the model is only significant for positive ESP readings.

A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold). Our research shows that stocks with this combination deliver a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of the Earnings ESP.

It’s important to remember that a negative Earnings ESP reading doesn’t necessarily mean earnings are lost. Our research shows that it’s difficult to predict earnings growth with any degree of confidence for stocks with negative Earnings ESP readings and/or a Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How do the numbers stack up for Silgan?

In the case of Silgan, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company’s earnings prospects. This has led to an Earnings ESP of -0.37%.

On the other hand, the company’s stock currently has a Zacks Rank of #3.

The combination of these factors makes it difficult to clearly predict that Silgan will beat consensus earnings per share estimates.

Does the history of surprising results hold any clue?

When calculating future earnings estimates, analysts often consider how well a company has been able to match consensus estimates in the past. So it’s worth taking a look at the history of surprises to assess its impact on the upcoming issue.

For the last reported quarter, it was expected that Silgan would post earnings of $0.83 per share when it actually produced earnings of $0.85, delivering a surprise of +2.41%.

The company has beaten consensus EPS estimates four times over the last four quarters.

Bottom Line

Beating or missing earnings may not be the only basis for a stock rising or falling. Many stocks lose ground despite beating gains due to other factors that disappoint investors. Similarly, unforeseen catalysts help many stocks gain despite missing earnings.

That said, betting on stocks that are expected to beat earnings expectations increases your chances of success. That’s why it’s worth checking a company’s earnings ranking and Zacks Rank ahead of their quarterly release. Use our Earnings ESP filter to find the best stocks to buy or sell before they’re reported.

Silgan doesn’t seem like a compelling candidate to beat earnings. However, investors should also pay attention to other factors if they want to bet on or stay away from these stocks ahead of an earnings release.

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