Unsafe At Current Price? – WestRock Company (WRK), Medallia Inc. (MDLA)

WestRock Company (NYSE: WRK) shares are -25.26% down in the year-to-date (YTD) period and have moved 5.74% or $1.74 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +49.16% lower. Comparatively, the stock is -27.75% down YTD and 7.37% over the trailing 3-month period. If we look at the shorter duration, its week performance is 4.84% and 15.28% over the month.

Analyst Recommendations

On January 06, 2020, Citigroup recommended the WRK stock is a Buy, while earlier, Morgan Stanley had Initiated the stock as a Equal-Weight on June 15, 2020. 15 analysts offering the recommendations for the stock have a consensus rating of 2.50 to suggest that the WRK stock is a “Moderate Buy. 1 of the 15 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 6 recommend buying, with 1 rating it as an Overweight.

The stock currently trades at $32.07 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $38.00. The forecasts give the WestRock Company stock a price target range of $55.00 on the higher side while at least one analyst think the stock could plunge to a low of $26.00. The two limits represent an upside potential of 41.69% or -23.35%.

Earnings Forecast

Analysts estimate the earnings to increase 72.70% in the current quarter to $0.65, down from the $1.24 reported in the same quarter a year ago. For the current year, earnings should grow to an average of $2.66, down -4.90% from $3.98 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between $0.33 and $0.7. Wall Street estimates earnings per share to be at an average of $2.45 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 64 over the last 12 months, while SEC filings reveal that there have been 17 insider sales over the same period. Insiders have purchases 832,634 shares while those sold by company executives and officers stand at 517,537. The last 3 months have seen insiders trade a total of 200 and 6,491 in purchases and sales respectively.

Nevels James E, a Director at the company, bought 100 shares worth $2702.0 at $27.02 per share on Jun 15. The Director had earlier bought another 100 WRK shares valued at $2815.0 on Jul 14. The shares were bought at $28.15 per share. Nevels James E (Director) bought 100 shares at $23.70 per share on May 14 for a total of $2370.0 while Nevels James E, (Director) bought 100 shares on Apr 14 for $3269.0 with each share fetching $32.69.

Medallia Inc. (NYSE:MDLA), on the other hand, is trading around $37.90 with a market cap of $5.22B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $33.73 and spell out a less modest performance – a -12.36% return. Some analysts are even forecasting $0.02 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Medallia Inc. (MDLA) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

MDLA’s operating margin was negative on the trailing 12 months basis, remaining steady at -34.50%, while the operating expenses over the recent quarter were at $106.45 million. This represented a 5.53% of the company’s total revenues which amounted $112.69 million. With this in place, we can see that the company’s diluted EPS declined -$0.24 on the year-over-year period, shrinking to -$0.08 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Jul 2020), the total assets figure advanced to $741.92 million from $731.65 million over the previous quarter. Short term investments amounted to $62.83 million while total current assets were at $526.59 million. The cash flow from operating activities totaled $23.11 million, significantly higher than the $18.24 million reported in the year-ago quarter. The company’s free cash flow for the quarter was $17.74 million.

Insider activity

Insiders have transacted a total of 102 times at Medallia Inc. over the last 6 months, with insider purchases undertaken 24 times and accounting for 1,152,950 shares. Insider sales totaled 4,670,990 shares over the same period, with these deals completed in 78 transactions. Looking at these numbers, we realize that net purchases over that period are -54.0 shares. Insiders now hold a total of 25.23M shares after the latest sales, with -2.20% net shares purchased.

Major holders

Insiders own 4.30% of the company shares, while shares held by institutions stand at 87.40% with a share float percentage of 128.04M. Investors are also buoyed by the number of investors in a company, with Medallia Inc. having a total of 172 institutions that hold shares in the company. The top two institutional holders are SC US (TTGP) Ltd with over 44.41 million shares worth more than $1.12 billion. As of Jun 29, 2020, SC US (TTGP) Ltd held 31.47% of shares outstanding.

The other major institutional holder is Champlain Investment Partners, LLC, with the investment firm holding over 9.04 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $228.23 million and represent 6.41% of shares outstanding.