What Investors Should Take Away From WinPak Stock’s Earnings

WinPak (TSX:WPK) stock has stagnated in share price over the last few years, but has there been enough momentum to interest investors?

| More on:
data analytics, chart and graph icons with female hands typing on laptop in background

Image source: Getty Images

Shares of WinPak (TSX:WPK) stock remained steady for yet another quarter — in fact, it’s been steady for yet another year, as the packaging company reported its earnings for the first quarter. This is why today we’re going to take a look at what’s been going on with WinPak stock. Because after missing estimates quarter after quarter, it’s time to figure out what’s going on with its share price.

About WinPak

Let’s first discuss what WinPak stock is in the first place. A better understanding of the company will hopefully allow us to understand more about what’s been causing the share price to stagnate. 

WinPak stock manufactures and distributes high-quality packaging materials and related packaging machines. The company serves various industries, including food, beverage, healthcare, and industrial markets. Winpak’s products include flexible packaging materials, rigid containers, and packaging machinery. 

During 2020, Winpak’s stock performance, like many companies, was influenced by the COVID-19 pandemic and its effects on the economy. The pandemic led to increased demand for certain packaged goods, such as food and healthcare products, while other segments faced challenges due to supply chain disruptions and changes in consumer behaviour. Yet this all was rolled back after the pandemic restrictions came to an end.

The last few years

WinPak stock has then stagnated over the last five years for a variety of reasons. While Winpak has seen some earnings-per-share (EPS) growth (around 3.2% annually), it’s been minimal. Stock prices typically rise with strong and consistent earnings growth, which hasn’t been the case for Winpak.

Furthermore, it’s possible that earlier expectations for Winpak stock’s growth were too ambitious. The stagnant share price could reflect a correction of those expectations that came out of the pandemic.

Even so, Winpak remains profitable, with a return on capital employed (ROCE) around the industry average. So, let’s see if there has been any momentum that investors can identify from the last few quarters to the most recent one.

Momentum underway?

Before we get to the first quarter, let’s look at the second, third, and fourth to paint a picture of whether WinPak stock is growing or stagnating further. During the second quarter, the company reported US$287,464 in revenue, with US$40,017 in net income as well as diluted EPS of US$0.62. 

The third quarter saw revenue decrease to US$273,790, with net income down to US$33,824 and EPS at US$0.52. By the fourth quarter, the company ticked up slightly, hitting US$275,637 in revenue, US$35,016 in net income, and US$0.54 in EPS.

For this first quarter, revenue climbed a touch higher, hitting US$276,783, with net income at US$35,775 and EPS at US$0.55. So overall, the company has seen improvements, but not as much as investors have hoped for.

Bottom line

Unfortunately, it seems that the company continues not to make enough moves to see any real share gains. And that comes down to not seeing a major increase in any of the important factors that would influence growth. Whether it’s more sales turning into more revenue and net income or sales to bring in cash flow and pay debts, WinPak stock continues to remain steady, with very little growth. So, the main takeaway here is until the company can see more growth in its performance, it’s unlikely to see more returns come the way of investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe 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.

More on Stocks for Beginners

Golden crown on a red velvet background
Dividend Stocks

Is a Dividend Cut Coming for This 8.92%-Yielding Stock?

BCE stock (TSX:BCE) recently increased its dividend by 3%, but investors may be in for a cut if the company…

Read more »

A worker uses a double monitor computer screen in an office.
Stocks for Beginners

Better Buy: TD Bank or Scotiabank?

If you want dividends, bank stocks can be the best. But which is the better buy depends on your risk…

Read more »

top TSX stocks to buy
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

These stocks may be up this year, but more is due as they still offer cheap stock status on the…

Read more »

Stocks for Beginners

1 Magnificent Dividend Stock That’s Down 21% and Trading at a Once-in-a-Decade Valuation

This dividend stock is near 52-week highs, but still down from all-time highs, with a highly valuable P/E ratio you…

Read more »

money cash dividends
Dividend Stocks

Here Is the Best Way to Start Investing With $1,000 Right Now

If want to start investing with $1,000, there are plenty of great stocks. Here are two to consider buying now…

Read more »

grow dividends
Stocks for Beginners

Sky’s the Limit: 2 High-Growth TSX Stocks to Buy and Hold Through 2030

Despite rallying over the last six months, these two TSX high-growth stocks still have the potential to deliver stellar returns…

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

3 Roaring Stocks to Hold for the Next 20 Years

These three growth stocks have surged in share price in the last year and yet have proven they can keep…

Read more »

Growth from coins
Stocks for Beginners

1 Growth Stock Down 8% to Buy Right Now

This growth stock may be down, but likely not for long, given its track record.

Read more »