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Sealed Air Grows on Reinvent SEE Strategy, New Restructuring
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Sealed Air Corporation (SEE - Free Report) recently announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program, in a move to drive the company’s growth and earnings. Following this news on Dec 14, shares of the company have gained nearly 5% to close at $33.94 on the same day.
The Reinvent SEE Strategy
Sealed Air’s new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. The strategy will help the company deal with critical packaging challenges, in turn, improving customer services.
One of the important elements of this strategy involves the investment in technology and resources focusing on new and existing high-growth markets. This step will double Sealed Air’s innovation rate over the next five years.
The company will also be aimed at simplifying its operational structure and expand SEE Operational Excellence by upgrading end-to-end processes throughout the company. Further, Sealed Air will be able to drive its market share in existing and adjacent markets by leveraging the company’s extensive distribution network. It will continue to invest in digital systems and processes, in order to enhance cycle time and awareness.
Thus, the new strategy will fuel Sealed Air’s growth by supporting packaging innovations for fresh food and e-Commerce, and increasing its operating leverage target above 40% per year, beginning in 2019.
Restructuring Program
Sealed Air has also announced a three-year restructuring program to drive total annualized savings by the end of 2021, in the range of $215-$235 million. The total cash cost of the new program is estimated to be $190-$220 million, to be incurred primarily in 2019 and 2020. The restructuring program costs include headcount-related costs, other associated costs and capital expenditures.
Notably, the company’s existing restructuring program, largely related to the elimination of stranded costs, will likely be completed in 2019. Sealed Air expects restructuring savings and cash-restructuring payments, associated with this program, to be around $25 million and $35 million, respectively.
Thus, by combining both restructuring programs, Sealed Air will realize total annualized savings of $240-$260 million from 2019 through 2021. Total cash restructuring payments and costs associated with the restructuring programs are projected at $225-$255 million during the same period.
In 2019, Sealed Air estimates total annualized savings to be in the $60-$80 million band, which includes $25 million from the previous restructuring program. Total cash restructuring payments and costs for both restructuring plans to be in the range of $115-$135 million for 2019.
Savings in 2019 are predicted to be partially offset by currency headwinds and inflationary costs. However, anticipated benefits from reducing costs, driving operational excellence and commercializing new innovations, combined with favorable global business trends, position the company well for improved results.
Price Performance
Shares of Sealed Air have slumped 31% in the past year compared with the industry’s decline of 15%.
Zacks Rank & Stocks to Consider
Sealed Air currently carries a Zacks Rank #4 (Sell).
DMC Global has a long-term earnings growth rate of 20%. The stock has appreciated 57% in a year’s time.
CECO has a long-term earnings growth rate of 14%. The company’s shares have been up 44% in a year.
Northwest Pipe has a long-term earnings growth rate of 10%. Its shares have rallied 26% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Sealed Air Grows on Reinvent SEE Strategy, New Restructuring
Sealed Air Corporation (SEE - Free Report) recently announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program, in a move to drive the company’s growth and earnings. Following this news on Dec 14, shares of the company have gained nearly 5% to close at $33.94 on the same day.
The Reinvent SEE Strategy
Sealed Air’s new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. The strategy will help the company deal with critical packaging challenges, in turn, improving customer services.
One of the important elements of this strategy involves the investment in technology and resources focusing on new and existing high-growth markets. This step will double Sealed Air’s innovation rate over the next five years.
Sealed Air Corporation Price
Sealed Air Corporation Price | Sealed Air Corporation Quote
The company will also be aimed at simplifying its operational structure and expand SEE Operational Excellence by upgrading end-to-end processes throughout the company. Further, Sealed Air will be able to drive its market share in existing and adjacent markets by leveraging the company’s extensive distribution network. It will continue to invest in digital systems and processes, in order to enhance cycle time and awareness.
Thus, the new strategy will fuel Sealed Air’s growth by supporting packaging innovations for fresh food and e-Commerce, and increasing its operating leverage target above 40% per year, beginning in 2019.
Restructuring Program
Sealed Air has also announced a three-year restructuring program to drive total annualized savings by the end of 2021, in the range of $215-$235 million. The total cash cost of the new program is estimated to be $190-$220 million, to be incurred primarily in 2019 and 2020. The restructuring program costs include headcount-related costs, other associated costs and capital expenditures.
Notably, the company’s existing restructuring program, largely related to the elimination of stranded costs, will likely be completed in 2019. Sealed Air expects restructuring savings and cash-restructuring payments, associated with this program, to be around $25 million and $35 million, respectively.
Thus, by combining both restructuring programs, Sealed Air will realize total annualized savings of $240-$260 million from 2019 through 2021. Total cash restructuring payments and costs associated with the restructuring programs are projected at $225-$255 million during the same period.
In 2019, Sealed Air estimates total annualized savings to be in the $60-$80 million band, which includes $25 million from the previous restructuring program. Total cash restructuring payments and costs for both restructuring plans to be in the range of $115-$135 million for 2019.
Savings in 2019 are predicted to be partially offset by currency headwinds and inflationary costs. However, anticipated benefits from reducing costs, driving operational excellence and commercializing new innovations, combined with favorable global business trends, position the company well for improved results.
Price Performance
Shares of Sealed Air have slumped 31% in the past year compared with the industry’s decline of 15%.
Zacks Rank & Stocks to Consider
Sealed Air currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same sector include DMC Global Inc. (BOOM - Free Report) , CECO Environmental Corp. and Northwest Pipe Company (NWPX - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DMC Global has a long-term earnings growth rate of 20%. The stock has appreciated 57% in a year’s time.
CECO has a long-term earnings growth rate of 14%. The company’s shares have been up 44% in a year.
Northwest Pipe has a long-term earnings growth rate of 10%. Its shares have rallied 26% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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