Reynolds Consumer Products surges 14% on Q4 revenue beat
Household goods maker exceeds expectations as retail volumes accelerate across all business units
Reynolds Consumer Products shares jumped 14% on Wednesday after the household goods maker reported fourth-quarter revenue that topped analyst expectations, signaling resilience in consumer demand despite broader economic pressures.
The stock surged $3.01 to $24.82, its best single-day performance in years, pushing the company's market capitalization to $4.86 billion. The rally came after the Lake Forest, Illinois-based company reported net revenues of $1.02 billion for the fourth quarter, exceeding the consensus estimate of $971.9 million by more than 5%.
The revenue beat masked some underlying pressure on profitability. Net income fell 12% to $121 million, or $0.58 per share, matching analyst expectations but down from $137 million a year earlier. Adjusted EBITDA declined 11% to $213 million, which the company attributed to anticipated higher operational costs and lower pricing.
Investors focused on the positive volume trends. Retail volume grew 1% in the quarter, with acceleration across all four business units. That performance outpaced many consumer staples companies that have struggled with volume declines as inflation-weary shoppers trade down to cheaper alternatives.
"Retail volume accelerated in the fourth quarter and we are confident in our ability to drive strong growth, further margin expansion, and attractive shareholder returns," said Scott Huckins, president and chief executive officer, in the earnings statement. The company cited strength in its flagship Reynolds Wrap and Hefty brands, which dominate their respective categories in aluminum foil and waste bags.
Segment performance showed mixed results. The Reynolds Cooking & Baking unit, which includes Reynolds Wrap, posted the strongest growth with revenue rising $17 million to $374 million, driven by retail volume increases of 3%. The Hefty Waste & Storage division added $8 million in revenue to reach $245 million, with retail volume up 3% and outperforming its categories.
However, the Hefty Tableware business struggled, with revenue declining $8 million to $251 million as lower foam plate volume offset modest growth in other products. Presto Products, which makes plastic storage and trash bags, saw flat revenue at $153 million.
For the full year 2024, Reynolds reported net revenues of $3.7 billion, slightly below the prior year's $3.76 billion. However, net income increased 18% to $352 million, driven by improved margins and lower interest expenses, demonstrating the company's ability to navigate a challenging cost environment.
The company issued guidance for 2025 that calls for net revenues to decline in the low single digits, with adjusted EBITDA expected between $670 million and $690 million. Adjusted earnings per share are projected at $1.61 to $1.68, suggesting modest growth from the $1.44 reported for 2024.
Analysts see potential upside from current levels. The consensus target price of $26.86 implies roughly 8% additional gains, according to market data. The stock trades at 16 times trailing earnings and 13.5 times forward estimates, with a dividend yield of 3.97% that appeals to income-focused investors.
Wednesday's surge lifted Reynolds shares close to their 52-week high of $26.92, suggesting the stock has room to run if the company executes on its margin expansion goals. The company emphasized its strong balance sheet and cash flow generation, positioning it to increase investment while returning capital to shareholders.
The positive reception contrasts with the broader consumer staples sector, which has underperformed the market this year as investors rotate into growth-oriented sectors. Reynolds' ability to maintain volume growth while navigating pricing pressure positions it well relative to peers that have seen demand soften.