Bemis Company Inc. Earnings: Fifth Straight Quarter of Shrinking Margins as Net Income Falls

S&P 500 (NYSE:SPY) component Bemis Company Inc. (NYSE:BMS) reported its results for the third quarter. Bemis Company is a manufacturer of flexible packaging products and pressure-sensitive materials for customers worldwide.

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Bemis Company Earnings Cheat Sheet for the Third Quarter

Results: Net income for Bemis Company Inc. fell to $55.9 million (53 cents per share) vs. $61.4 million (55 cents per share) a year earlier. This is a decline of 9.1% from the year earlier quarter.

Revenue: Rose 4.9% to $1.36 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BMS reported adjusted net income of 56 cents per share. By that measure, the company fell short of mean estimate of 58 cents per share. Analysts were expecting revenue of $1.37 billion.

Quoting Management: “During the third quarter, unit volumes decreased in nearly every market category, reflecting the concern about softness in demand that our customers had expressed earlier in the year,” said Henry Theisen, Bemis Company’s President and Chief Executive Officer. “Food price inflation has driven grocery store prices higher in 2011, challenging consumers to stretch their grocery store dollars. Most of our customers experienced lower unit sales volumes in many of the product categories for which we provide packaging, and we expect this trend to continue through the fourth quarter.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.2 percentage points to 16.5% from the year earlier quarter. Over that time, margins have contracted on average 1.3 percentage points per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 7.9% to $1.37 billion in the second quarter. The figure rose 29.6% in the first quarter from the year earlier and climbed 37.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last two quarters. In the second quarter, net income fell 9% from the year earlier quarter.

The company fell short of estimates last quarter after beating the mark the quarter before with net income of 51 cents versus a mean estimate of net income of 50 cents per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 55 cents per share, down from 60 cents ninety days ago. At $2.10 per share, the average estimate for the fiscal year has fallen from $2.19 ninety days ago.

Competitors to Watch: Sonoco Products Company (NYSE:SON), Sealed Air Corp. (NYSE:SEE), Rock-Tenn Company (NYSE:RKT), AptarGroup, Inc. (NYSE:ATR) and Can Tho Sadico Joint Stock Corp (NYSE:SDG).

Investing Insights: Here’s Why Chipotle’s Stock Keeps Winning.

(Source: Xignite Financials)