Reynolds Consumer Up 5% On Upgraded Earnings Outlook

Reynolds Consumer shares advanced 4.6% on Wednesday, Nov. 11 after the company reported better-than-expected results for the third quarter and raised its full-year earnings outlook.

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The company’s 3Q revenue grew 11.1% year-over-year to $823 million, surpassing analysts’ estimate of about $797 million. Reynolds Consumer (REYN) attributed the top line growth to increased at-home use of its products amid the pandemic and the impact of new products. The company boasts a presence in 95% of households across the US. It sells cooking products, waste and storage items and tableware under Hefty and its namesake Reynolds brands.

Meanwhile, 3Q adjusted EBITDA grew 18.5% year-over-year to $192 million, driven by higher revenue and lower material and manufacturing costs. However, increased advertising and personnel costs were a drag on the quarter’s profitability. The 3Q adjusted EPS of $0.56 came in ahead of analysts’ estimate of $0.51.

As for 4Q, Reynolds expects mid-single digit revenue growth and adjusted EBITDA of $195 million-$200 million. For the full-year, the company anticipates $3.24 billion-$3.26 billion in revenue. It now expects adjusted EPS to be in the range of $1.95-$1.97, compared to the previous outlook of $1.85-$1.92. (See REYN stock analysis on TipRanks)

Reynolds Consumer went public in January of this year. Shares have declined 8.1% in the last three months. The average price target stands at $35, indicating an upside potential of 15.4% in the coming 12-months. The Street is cautiously optimistic on the stock, with a Moderate Buy analyst consensus based on 1 Buy and 1 Hold.

Ahead of the results, RBC Capital analyst Nik Modi reiterated a Hold rating for Reynolds Consumer with a price target of $34 (12.1% upside potential).