News

Shares of Pactiv Evergreen (NASDAQ: PTVE), a leading manufacturer of food packaging items, were pulling back today after the company posted disappointing top-line results in its fourth-quarter earnings report.

As of 12:23 p.m. ET, the stock was down 9.8%.

Pactiv Evergreen comes up short

Shares of the restaurant industry supplier reported a 14% decline in revenue in the fourth quarter to $1.27 billion, which compared to analyst estimates of $1.32 billion.

The decline was largely expected after Pactiv closed a mill in North Carolina as part of its strategy of pivoting away from its legacy beverage manufacturing operations. The company also cited lower sales volume, unfavorable pricing due to lower material costs that are passed on to customers, and an unfavorable sales mix as reasons for the lower revenue.

That strategy did pay off on the bottom line as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) improved from $167 million to $207 million. Adjusted earnings per share, which eliminates restructuring costs, improved from $0.17 to $0.33, which beat estimates at $0.21.

Pactiv Evergreen also announced another restructuring plan it's calling a "footprint optimization" that is expected to deliver cost savings of $35 million by 2026 and incur restructuring charges of $70 million to $105 million.

CEO Michael King said, "The company made significant progress on multiple fronts of its transformational journey in 2023," adding, "Looking ahead to 2024, the company plans to initiate the next phase of its strategic transformation through a footprint optimization plan, which will include the rationalization of a portion of the company's production capacity."

What's next for Pactiv Evergreen?

Management expects adjusted EBITDA of $850 million to $870 million in 2024, which represents a slight improvement from $840 million in EBITDA in 2023.

While investors may dislike the double-digit revenue decline and another restructuring plan, the improvement on the bottom line seems to indicate the company is moving in the right direction. Trading at a price-to-earnings ratio of 14, the stock looks reasonably priced, especially if the cost-cutting programs can deliver the desired results.

Should you invest $1,000 in Pactiv Evergreen right now?

Before you buy stock in Pactiv Evergreen, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Pactiv Evergreen wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

*Stock Advisor returns as of February 26, 2024

Jeremy Bowman 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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.