Why Smurfit Westrock Stock Was Sliding This Week
Key Points
It published its third-quarter figures, and possibly wishes it hadn't.
It whiffed by quite a margin on adjusted net income.
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Smurfit Westrock's (NYSE: SW) equity looked like it was headed for a double-digit percentage plunge this week. The global packaging company released a set of quarterly earnings that wasn't greeted warmly by either investors or analysts. Mostly because of this, its share price was down by more than 16% week to date as of Friday before market open.
A significant bottom-line miss
Wednesday morning, Smurfit published its third-quarter numbers. These showed that the company's net sales were slightly over $8 billion for the frame, which was 4% higher year over year. They were also good enough to top the average analyst estimate of $7.89 billion.
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Smurfit's bottom line according to generally accepted accounting principles (GAAP) flipped to a profit of $245 million from the year-ago loss of $150 million. On a non-GAAP (adjusted), per-share basis, its net income rose to $0.58 from $0.53. Analysts, however, were collectively expecting a notably higher figure of $0.72 for that line item.
In its earnings release, CEO and company namesake Tony Smurfit said that so far, 2025 "has been characterized by a challenging demand backdrop." It is currently taking steps to rationalize its business.
Lowering the boom
One day after Smurfit's third quarter was made public, several analysts lowered their price targets on the stock. None of these cuts were drastic -- RBC Capital's Matthew McKellar, for example, only lowered his by $1 per share to $54 although he maintained his outperform (buy) recommendation. However, when taken together they likely exacerbated the negative sentiment hovering over Smurfit.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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