Rock-Tenn Earnings Preview

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After beating estimates last quarter by $0.08, Rock-Tenn (NYS: RKT) has set the standard for itself. The company will unveil its latest earnings on Wednesday, Nov. 9. Rock-Tenn is a manufacturer of packaging products, recycled paperboard, containerboard, bleached paperboard, and merchandising displays.

What analysts say:

  • Buy, sell, or hold?: Analysts are very bullish on this stock, unanimously backing it as a buy. Analysts like Rock-Tenn better than competitor Temple-Inland overall. Zero out of six analysts rate Temple-Inland a buy compared to seven of seven for Rock-Tenn. Analysts haven't adjusted their rating of Rock-Tenn for the past three months.
  • Revenue forecasts: On average, analysts predict $2.53 billion in revenue this quarter. That would represent a rise of 213.6% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $1.57 per share. Estimates range from $1.45 to $1.65.

What our community says:
CAPS All-Stars are solidly behind the stock with 95.9% awarding it an "outperform" rating. The community at large agrees with the All-Stars with 94.2% assigning it a rating of "outperform." Fools have embraced Rock-Tenn, though the message boards have been quiet lately with only 54 posts in the past 30 days. Even with a robust four out of five stars, Rock-Tenn's CAPS rating falls a little short of the community's upbeat outlook.

Management:
Revenue has now gone up for three straight quarters. The company's gross margin shrank by 7.4 percentage points in the last quarter. Revenue rose 79.1% while cost of sales rose 96.3% to $1.17 billion from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q3

Q2

Q1

Q4

Gross Margin

15.4%

21.0%

23.5%

25.3%

Operating Margin

0.8%

9.0%

12.5%

14.0%

Net Margin

(2.2%)

4.7%

6.6%

11.3%

One final thing: If you want to keep tabs on Rock-Tenn movements, and for more analysis on the company, make sure you add it to your Watchlist.

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.

At the time this article was published

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