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Bemis Company

BMS

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Earnings momentum for Bemis Company, Inc. (BMS - Analyst Report) is flying higher following its healthy third quarter earnings beat and upward guidance revision. Shares of this flexible packaging products maker hit the new 52-week high on October 25, the same day as its earnings report. This Zacks #1 Rank (Strong Buy) stands to gain from the savings of its facility consolidation program, higher sales from certain high-barrier food packaging products and an improving sales mix.

Bemis Tops in Q3

On October 25, Bemis reported adjusted third-quarter earnings per share of 60 cents, which trounced the Zacks Consensus Estimate by more than 11%. This marked the company’s fourth straight beat.

Net sales slipped 5% year over year to roughly $1.3 billion. Contributions from acquisitions were more than masked by lower unit volume in the flexible packaging business segment and unfavorable currency translation.

The company raised its earnings forecast for 2012 to between $2.10 and $2.15 per share from the earlier view of $2.00 to $2.10. This optimism reflects the expected savings from facility consolidation.

Earnings Estimates Moving Higher

For 2012, all eight estimates have been revised higher in the last 30 days, boosting the Zacks Consensus Estimate by roughly 4% to $2.12 a share. This indicates an estimated annualized growth of about 6.7%.

Eight estimates out of ten have moved higher for 2013 over the same period. The Zacks Consensus Estimate advanced approximately 3% to $2.30 per share, representing a projected year-over-year growth of 8.5%.

Reasonable Valuation

Bemis is currently trading at a premium on a P/E basis. It is currently trading at a forward P/E of 15.79x, a roughly 13.4% premium to the peer group average of 13.92x. Moreover, its trailing twelve months P/E of 16.11x is higher than the peer group average of 14.41x. The price-to-book of 2.14x is, however, lower than the peer group average of 3.72x. The valuation looks reasonable considering the company’s earnings growth prospects.

Sound Technicals

Technical indicators show that Bemis has been trading above its 50-day and 200-day moving averages since September 2012. Following a bullish crossover in October 2012, the 50-day moving average is higher than the 200-day moving average of late, reflecting the bullish trend.

On the performance front, Bemis has outperformed the S&P 500 over the past year, delivering a return of roughly 21% versus 15% for the benchmark.

Founded in 1858, Bemis Company Inc. makes flexible packaging products and pressure sensitive materials for a host of industries, including food, chemical, pharmaceutical, personal care, electronics, automotive and construction. Its offerings include multi-layer flexible polymer film structures, blown and cast stretch film products, carton sealing tapes, adhesive coated paper and film substrates. Bemis, which has a market cap of around $3.5 billion, employs roughly 20,000 people in 80 manufacturing facilities across the U.S., Canada, Mexico, South America, Europe and Australasia.


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