Why Greif's Shares Popped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of packaging supplier Greif (NYS: GEF) rose 10% today after the company announced fiscal-third-quarter earnings.

So what: Revenue fell 2% to $1.1 billion and net income fell 39% to $40.7 million, or an adjusted $0.75 per share, in the third quarter but the expectations were worse. Analyst only expected earnings per share of $0.72 and revenue was in-line with expectations.

Now what: This is a classic case of expectations being lower than the actual results. Even though operating conditions got worse for Greif, the results beat the bar investors had set and that's why the stock is popping today.

Despite the good results for last quarter, I wouldn't jump on the bandwagon today. Management said that volumes would be lower than expected for the rest of the year, and with the stock trading at 16 times fiscal 2012's expected earnings, I'm not seeing this as a value today.

Interested in more info on Greif? Add it to your watchlist byclicking here.

The article Why Greif's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.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.

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