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Bemis Poised for Growth Amid Market & Economic Headwinds

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On Mar 29, we issued an updated research report on Bemis Company, Inc. . The company is poised to benefit from focus on accelerating growth and innovation, capital allocation strategy and asset recapitalization program. However, the tepid U.S. packaged food market and sluggish Brazilian economy remain headwinds.

During 2016, Bemis initiated a capital allocation strategy and also increased the share repurchase authorization by 20 million shares. The company remains focused on capital spending for organic growth and efficiency improvements. It is also committed toward returning free cash flow to shareholders over the long term through dividend and share repurchases.

Bemis will continue its asset recapitalization program in the U.S., which, in turn, will enhance its performance in the near term. The company has made solid progress in its restructuring program in Latin America. This plan will aid in improving its cost structure and drive the company’s results. Bemis has also made great progress in leveraging its technologies globally.

However, Bemis continues to bear the brunt of a flat-to-declining U.S. packaged food market. In eight of the past nine years, volumes in the core flexible packaging business remained flat to down as Bemis has been struggling with a complex supply chain.

Further, inflation has been much higher in Argentina and Brazil, where Bemis has its operations. Market growth has been sluggish in the region which is likely to lead to pricing erosion amongst competitors. Further, the sluggish Brazilian economy could impact consumer adoption of Bemis' higher priced packaging solutions.

Bemis currently carries a Zacks Rank #3 (Hold).

Share Price Performance

Year to date, Bemis has modestly outperformed the Zacks classified Containers & Glass sub-industry with respect to price performance. The stock gained around 2.4%, while the industry recorded growth of 2.1% over the same time frame.



Stocks to Consider

Better-ranked stocks in the same space include ACCO Brands Corporation (ACCO - Free Report) , Parker-Hannifin Corporation (PH - Free Report) and Casella Waste Systems, Inc. (CWST - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ACCO Brands has a positive average earnings surprise of 24.74% for the last four quarters. Parker-Hannifin has delivered an average positive earnings surprise of 12.44% in the past four quarters. Casella Waste generated a remarkable positive average earnings surprise of 165.21% over the trailing four quarters.

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