What Happened?
Shares of household products company Reynolds (NASDAQ:REYN) jumped 16.1% in the afternoon session after the company reported fourth-quarter results that topped revenue estimates, though it provided a cautious outlook for 2026. Net revenue for the quarter grew 1.3% year over year to $1.03 billion, beating analyst predictions, while adjusted earnings of $0.59 per share were in line with expectations. The company also generated strong free cash flow, with its margin increasing to 19.3% from 13.8% in the same quarter last year, a key indicator of financial health. However, the forecast for the upcoming year was less optimistic, with guidance for both full-year earnings and next quarter's revenue falling short of Wall Street's estimates. The market's positive reaction suggests investors weighed the current quarter's solid performance and strong cash generation more heavily than the weaker-than-expected forward guidance.
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What Is The Market Telling Us
Reynolds’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. Moves this big are rare for Reynolds and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock gained 6.2% on the news that the company reported second-quarter results that beat Wall Street estimates for both revenue and adjusted earnings per share. The maker of Hefty bags and Reynolds Wrap posted adjusted earnings of $0.39 per share on revenue of $938 million, which exceeded analyst forecasts. However, the positive results were tempered by other figures. The company’s net income declined to $73 million from $97 million in the same quarter last year, reflecting higher costs. Furthermore, Reynolds reaffirmed its full-year 2025 guidance, which projected a low single-digit decline in net revenues compared to the prior year. The company's forecast for the third quarter was also in line with consensus, offering no significant upside surprise to investors.
Reynolds is up 7.4% since the beginning of the year, but at $24.76 per share, it is still trading 11% below its 52-week high of $27.81 from February 2025. Investors who bought $1,000 worth of Reynolds’s shares 5 years ago would now be looking at an investment worth $837.62.
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