Report by Behind the Numbers
SEE’s 3Q EPS beat is an illusion and the fact that metric guidance changes should help 4Q and management didn’t boost the FY outlook indicates that too - the price hike in 3Q likely pulled demand from 4Q as volume comps get tough. Others are cutting guidance on recent FX gains reversing (FX has been a key to SEE’s recent EPS gains). 4Q’s $1.13 estimate is relying on 25-cents from 3Q’s one-time price hikes > 4Q cost inflation.
Report by Behind the Numbers
Investor enthusiasm unwarranted, price rises will be unable to offset cost pressure - the price hike will only help 15 days in 3Q and BTN believes commodity inflation has worsened since the price increase was announced. SEE’s easy comps are over and the company will miss guidance this quarter. The stock remains a high conviction Short idea with an EQ (Earnings Quality) rating of 2 (Weak) - indicating that results have benefitted materially from aggressive accounting.