It has been about a month since the last earnings report for Amcor (AMCR). Shares have lost about 1.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Amcor due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Amcor's Earnings Meet Estimates in Q2, Revenues Decrease 0.3% Y/Y

Amcor reported second-quarter fiscal 2025 adjusted earnings per share  of 16 cents, which met the Zacks Consensus Estimate. The company reported earnings of around 16 cents per share in the year-ago quarter. Gains from improved volumes, continued strong cost performance and benefits from restructuring initiatives were offset by unfavorable impacts from price/mix.

Including special items, the company reported net earnings per share of 11 cents compared with nine cents in the prior-year quarter.

Amcor’s revenues dipped 0.3% year over year to $3.24 billion. The downside was due to a 1% unfavorable impact of foreign exchange and a 1% impact of pass-through of lower raw material costs. The volume rose 2.3% from the year-ago quarter. Price/mix had an unfavorable impact of approximately 2%, primarily due to lower volumes in high-value healthcare categories. The top line missed the Zacks Consensus Estimate of $3.44 billion.

Amcor’s Cost & Margins in Q2

The cost of sales was down 0.6% year over year to $2.62 billion. Gross profit grew 0.8% year over year to $626 million. The gross margin was 19.3% compared with the year-ago quarter’s 19.1%.

Selling, General & Administrative expenses were $295 million, down 1.3% year over year. The company reported an operating income of $297 million in the fiscal second quarter compared with $242 million in the year-ago quarter.

Adjusted operating income was $363 million, up 3% from $352 million in the prior-year quarter. Improved volumes, continued strong cost performance and benefits from restructuring initiatives were offset by unfavorable impacts from price/mix. The adjusted operating margin was 11.2% compared with 10.8% in the prior-year quarter. 

Adjusted EBITDA was $453 million compared with $454 million in the prior-year quarter.

AMCR’s Segment Performance in Q2

Flexibles: Net sales rose 1.2% year over year to $2.51 billion. Volume rose 3% year over year. However, unfavorable movements in foreign exchange rates and impacts related to the pass-through of higher raw material costs each had an offsetting impact on net sales of approximately 1%. Adjusted operating income improved 3% year over year to $322 million. 

Rigid Packaging: The segment reported net sales of $730 million, down 5% from the prior-year quarter. Volume was down 1% year over year. An unfavorable 2% currency impact and an unfavorable impact of approximately 2% related to the pass-through of lower raw material costs also led to the decline in sales. Adjusted operating income was $53 million, 4% higher than the year-ago quarter.

Amcor’s Q2 Cash Flow & Balance Sheet Updates

At the end of the fiscal second quarter, Amcor had $445 million of cash and cash equivalents compared with $588 million as of fiscal 2024-end. The company generated $159 million of cash in operating activities in the first half of fiscal 2025 compared with $228 million in the year-ago comparable period.

As of Dec. 31, 2024, Amcor’s net debt totaled $6.5 billion, up from $6.11 billion as of June 30, 2024.

Amcor’s board of directors declared a quarterly cash dividend of 12.75 cents per share, to be paid on March 18, to shareholders of record on Feb. 26, 2025.

AMCR’s FY25 Guidance

Adjusted EPS is expected to be 72-76 cents. The company projects an adjusted free cash flow of $900-$1,000 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Amcor has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Amcor has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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