Amcor's Share Price Set to Fall After EPS Guidance Cut — Market Talk

What happened

Amcor cut its expected earnings per share (EPS), meaning profit allocated to each share, for the six months through December to US$1.70–US$1.80, from US$1.80–US$1.90. Jefferies said the cut was 5% below prior guidance and expected Amcor’s share price to fall when Australia’s market opened.

Confirmed

Global impact / market context

Lower expected profit per share can weaken the case for holding Amcor shares, while weaker free cash flow—cash left after operating and investment needs—can leave less cash available to reduce borrowed money. Jefferies said this would raise leverage, meaning debt relative to financial capacity, to 3.8 times.

Analyst inference

The cut came despite Amcor previously reiterating that Middle East-related pressures would have no impact because pricing would offset inflation. Jefferies said the revised outlook was 11% below the midpoint of consensus hopes for the December quarter, increasing the risk of disappointment against expectations.

Confirmed

What to watch

1. Check Amcor’s reported December-quarter EPS against its US$1.70–US$1.80 forecast for the six months through December; the result will show whether the guidance cut proved sufficient. Analyst inference
2. Look for updates on pricing and inflation, since Amcor had said pricing would offset inflation and Jefferies cited that assurance when explaining why the cut could surprise investors. Analyst inference
3. Watch free cash flow, meaning cash left after operating costs and investment, and reported leverage, meaning borrowed money relative to earnings; Jefferies said weaker cash flow would leave leverage elevated at 3.8 times. Confirmed

Evidence

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