Why Silgan Holdings Stock Dove by Nearly 14% on Wednesday
Key Points
Market players tend to trade on potential, not trailing performance.
A notable guidance cut put the packaging specialist in the investor doghouse on hump day.
Wednesday morning, packaging specialist Silgan Holdings (NYSE: SLGN) opened the box that was its third-quarter results. Investors clearly didn't like what was inside the container, as they assertively traded out of the company's stock. It lost nearly 14% of its value that trading session, against the flat performance of the bellwether S&P 500 index.
A tale of two growth rates
Net sales for Silgan rose notably in the period, to almost $2.01 billion from $1.74 billion in the year-ago frame. A bit less impressively, its net income not according to generally accepted accounting principles (GAAP) only ticked up slightly. It landed at $130 million, or $1.22 per share, which was marginally better than the third-quarter 2024 non-GAAP (adjusted) profit.
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Analysts tracking Silgan weren't expecting such meaty growth. They were modeling $1.93 billion for net sales. Meanwhile, they were spot-on with an average estimate of $1.22 for adjusted net income.
In the earnings release, Silgan CEO Adam Greenlee said the company "continued to exhibit the success of our strategic growth initiatives, the resilience of our business through dynamic customer and end market conditions and the benefits of our disciplined capital deployment mode."
The unkindest cut
Since investors typically trade on a stock's future rather than its trailing performance, Silgan's bottom-line guidance cut for the entirety of 2025 didn't do it any favors. Management now sees the company booking an adjusted profit of $3.66 to $3.76 per share for the year, well down from its former range of $3.85 to $4.05.
Compounding that, it revised its estimate for interest and other debt expenses for the entirety of 2025; this is now $190 million, up from the preceding $185 million.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.