This top 50 ASX stock is diving 5% despite a strong outlook

Investors were looking for more.

| More on:
Woman inspecting packages.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

ASX stock Amcor PLC (ASX: AMC) has dropped into the red on Friday after the company posted its financials for the first quarter of FY25.

Shares in the packaging solutions company currently fetch $15.95 apiece, 5% lower on the day as investors react to the news.

The downsides come despite management reaffirming a positive outlook for the year. Here are the details.

Created with Highcharts 11.4.3Amcor Plc PriceZoom1M3M6MYTD1Y5Y10YALL1 Nov 20231 Nov 2024Zoom ▾Nov '23Jan '24Mar '24May '24Jul '24Sep '24Nov '24Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24Oct '24Oct '24www.fool.com.au

ASX stock slides on Q1 results

In its latest quarterly update, Amcor reported mixed financial results. Here are the highlights:

  • Net sales fell 3% year-over-year to US$3.35 billion, impacted by lower raw material costs and foreign exchange rates
  • Adjusted pre-tax earnings rose 3% to US$365 million
  • Reported net income came in at US$191 million, translating to earnings per share (EPS) of 13.2 US cents, up from 10.5 US cents the prior year
  • Amcor increased its quarterly dividend to 12.75 US cents per share

What else happened in Q1 FY25?

The ASX stock reported steady volume growth in its core Flexibles and Rigid Packaging segments, with sequential improvement in customer demand.

Total volumes shipped were up 2% over the year, also up about 100 basis points from the previous quarter.

But there were headwinds, which management put down to softer demand from the US beverage and healthcare industries, plus the effect of sales price and sales mix.

In its flexibles segment, revenues of US$2.6 billion were down 1% on a reported basis, mostly impacted by unfavourable exchange rates.

Despite this, volumes were 3% higher in this segment over the twelve months.

Meanwhile, the Rigid Packaging division saw 8% lower sales growth compared to Q1 FY24, with volumes and average pricing both down. This may have impacted the ASX stock today.

What did management say?

Amcor's CEO, Peter Konieczny, expressed optimism about the company's growth trajectory:

I am pleased with the overall performance trajectory of the business and I am excited about the significant opportunities we have ahead of us to enhance our profitable organic growth profile, continue to build earnings momentum and evolve into an even stronger company than we are today.

We have already taken a number of concrete actions to further leverage Amcor's market leading positions and capabilities and strengthen our ability to generate attractive, sustainable shareholder returns.

The positive tone suggests Amcor is well-positioned to capitalise on ongoing customer demand, particularly with improvements in key segments.

What's next?

Looking ahead, the ASX stock aims to strengthen its market presence by focusing on organic growth and potential acquisitions.

The company reaffirmed its fiscal 2025 outlook, with expected adjusted EPS between 72 and 76 US cents and adjusted free cash flow of US$900 million to $1 billion.

Exchange rates could also be a factor to consider, the company says.

Assuming current exchange rates prevail through fiscal 2025, movements in exchange rates are not
expected to have a material impact on reported EPS.

ASX stock snapshot

The Amcor share price has been on a solid run in 2024, with shares up nearly 12% in that time. Investors have sold the ASX stock today after the Q1 FY25 numbers, despite the reaffirmed guidance.

In the last 12 months, it has rallied more than 16%.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Amcor Plc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Web Travel share price rockets 13% on market leading full-year growth

Investors are sending Web Travel shares soaring today. Here’s why.

Read more »

Happy shopper at a clothes shop.
Earnings Results

Why did Myer shares just rocket 9%?

Investors are piling into Myer shares on Friday. But why?

Read more »

A woman looks up at a plane flying in the sky with arms outstretched as the Flight Centre share price surges
Earnings Results

Up 78% since April, why is the Webjet share price taking off again today?

Webjet shares have soared 78% since 4 April and are lifting off again today. But why?

Read more »

a woman holds her hands to her temples as she sits in front of a computer screen with a concerned look on her face.
Industrials Shares

Guess which ASX 200 stock is crashing 24% on results day

Investors were not impressed with this result. But why?

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a group of people sit around a computer in an office environment.
Earnings Results

Guess which ASX 200 tech stock is rocketing 12% on record results

Another half, another record result from this high-quality company.

Read more »

A young man sitting at an outside table uses a card to pay for his online shopping.
Consumer Staples & Discretionary Shares

Why is the Kogan share price crashing 12%?

Profits are down at this ecommerce company during the second half.

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Resources Shares

Guess which ASX 200 mining stock is sinking 7% following its quarterly update

Let's see how this miner performed during the third quarter.

Read more »