AptarGroup, Inc. (ATR Quick QuoteATR - Free Report) remains well poised to gain from its business-transformation plan, product roll outs, focus on improving operations and acquisitions. 

 

The company is a global provider of consumer product dispensing systems catering to beauty, personal care, home care, prescription drug, consumer health care, injectables, food and beverage markets. Its shares gained 26% in a year’s time, outperforming the industry’s growth of 3%.

 

 

Lets’ delve deep into what is driving the stock and makes it an intriguing choice for investors right now.

 

Better-than-expected Q2: AptarGroup delivered second-quarter 2018 earnings per share of $1.09, beating the Zacks Consensus Estimate of $1.01. Further, earnings grew 4% year over year and came in above management’s guided range of 99 cents to $1.04 per share. 

 

Upbeat Q3 Guidance: The company projects earnings per share for the third quarter at 90-95 cents, excluding any restructuring expenses and effects associated with the CSP Technologies acquisition. The guidance reflects year-over-year growth of 11% at the mid-point. AptarGroup expects its core sales to grow in each segment in the third quarter. The Zacks Consensus Estimate for the third quarter is at 93 cents, reflecting year-over-year growth of 12%.

 

Transformation Plan to Aid Results: In late 2017, AptarGroup began a business-transformation plan in a bid to become a more agile, competitive and customer-centric business. This plan includes a wide range of initiatives to drive sales growth, enhance operational excellence along with improving organizational health and effectiveness. AptarGroup is poised to gain from its focus on the plan which is likely to yield annual recurring incremental EBITDA of approximately $80 million by the end of 2020. 

 

Acquisitions Remain a Catalyst: AptarGroup remains committed to its strategy of expanding business through inorganic growth. In sync with this, the company has made a binding offer to acquire CSP Technologies, a leader in active packaging technology based on proprietary material science expertise, for an enterprise value of $555 million. The buyout will help AptarGroup bolster its existing business in the Pharma and Food Safety markets considering that CSP Technologies' current business is roughly 75% in the pharma market and 25% in the food safety market. Further, the company acquired 100% of the common stock of Reboul, a French manufacturer specializing in stamping, decorating and assembling metal and plastic packaging for the cosmetics and luxury markets, for approximately $3.6 million.

 

New Product Rollouts to Boost Revenues: AptarGroup is well poised to gain from product launches. In the Beauty + Home segment, it provided LVMH with customized dispensing solution for double serum facial skin care product in Europe. In personal care, the company designed a custom pump for Johnson & Johnson's major global relaunch of their iconic baby care line, ranging from shampoo to bubble bath to lotion. In home care, AptarGroup’s Fine Mist pump, with prolonged spray technology, is featured on a room refresher spray by J.R. Watkins.

 

In its Pharma segment, its preservative-free, multi-dose Ophthalmic Squeeze Dispenser was announced as the approved delivery device for Bausch+ Lomb's prescription LevofreeMultidose in France. In consumer health care, its Advanced Preservative Free Plus pump for eye care is found on a new dry eye mist by Similasan in the CVS store brand in the United States. In the injectables market, the company launched a muscle relaxer in Mexico, and a pain reliever and aesthetic products in North America. In Food + Beverage segment, its Flow Control silicone valve is performing very well. Further, Daisy continues to grow with their inverted Squeeze Sour Cream product and recently introduced a new light version using custom dispensing closure with valve technology.

 

Return on Assets (ROA): AptarGroup currently has a ROA of 7.4%, while the industry's ROA is 5.7%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.

 

Positive Earnings Surprise History: AptarGroup has surpassed earnings estimates in the trailing four quarters, delivering an average positive earnings surprise of 8.05%.

 

Growth Projections: Estimates for AptarGroup have been revised upward over the past 30 days, reflecting the brokers’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for both 2018 and 2019 being moved north by 3%.

 

The Zacks Consensus Estimate for current-year earnings per share is pegged at $3.89, representing year-over-year increase of 13%. For 2019, the consensus estimate for earnings per share is pegged at $4.27, translating into a year-over-year rise of 9.80%.

 

The expected long-term earnings growth is pegged at 8.5%.

 

In light of these positives, we believe investors should retain AptarGroup stock for now. The stock's Zacks Rank #3 (Hold) and Zacks VGM Score of B seems to suggest the same. Here V stands for Value, G for Growth and M for Momentum. Such a score allows you to eliminate the negative aspects of stocks and select winners. The VGM Score of B, along with some other key metrics, makes the company a solid choice for investors.

 

 

Some better-ranked stocks in the same space worth considering are W.W. Grainger, Inc. (GWW Quick QuoteGWW - Free Report) , Lawson Products, Inc. and Atkore International Group Inc. (ATKR Quick QuoteATKR - 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.

 

Grainger has a long-term earnings growth rate of 12.5%. Its shares have appreciated 125%, over the past year.

 

Lawson Products has a long-term earnings growth rate of 17.5%. The company’s shares have gained 39% in a year’s time.

 

Atkore International has a long-term earnings growth rate of 10%. The stock has rallied 78% in a year’s time.

 

 

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

 

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.