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Crown Holdings (CCK) Up 43% YTD: Will the Rally Continue?

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Shares of Crown Holdings Inc. (CCK - Free Report) have rallied 42.7% year to date, backed by its encouraging outlook, solid global beverage-can demand as well as focus on acquisitions and cost control.
 
Crown Holdings, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $8.03 billion. The company has an expected long-term earnings per share growth rate of 7%.

Notably, the stock’s 42.7% year-to-date rally has outperformed the  industry’s growth of 40.6%.



Let’s delve deep and analyze the reasons behind the company’s impressive price performance and find out if there is room for further appreciation:
 
Revenues Top Estimates in Q1: Crown Holdings’ revenues in the first quarter climbed 25.4% year over year to $2,755 million, beating the Zacks Consensus Estimate of $2,750 million. This upside was driven by positive impact of the Signode acquisition, and increased beverage and food can volumes. In fact, global beverage can volumes grew 3% year over year in the Mar-end quarter. Moreover, earnings per share in the first quarter increased 11.7% year over year to $1.05.
 
Upbeat Outlook: Crown Holdings will continue to benefit from strong global beverage-can demand as customers and consumers are favoring cans over other formats. As a result, the company maintained its adjusted earnings per share guidance of $5.20-$5.40 for the current year.

Healthy Growth Projections: The Zacks Consensus Estimate for Crown Holdings’ current-year earnings per share is currently pegged at $5.29, reflecting year-over-year growth of 1.73%. The same for 2020 is pinned at $5.64, indicating a year-over-year rise of 6.5%.

Growth Drivers Ahead: Crown Holdings is focused on disciplined pricing, cost control and capital allocation. It also continues to pursue growth opportunities through capacity additions to existing plants, new plants in existing markets, strategic acquisitions in geographic areas and product lines. In sync with this, Crown Holdings acquired Signode Industrial Group Holdings (Bermuda) Ltd. in 2018, which will likely be accretive to earnings and cash flow for the ongoing year. Further, its buyout of EMPAQUE, a leading manufacturer for the beverage industry in Mexico, has fortified the company’s presence in the growing Mexican market.

Emerging markets, such as Southeast Asia and Mexico, have witnessed higher growth rates in beverage can demand due to rising per capita income and increase in beverage consumption. With its many inherent benefits, including being infinitely recyclable, beverage cans continue to gain popularity among marketers and consumers globally. Crown Holdings intends to build new facilities in order to cater to the rising demand.
 
Cheaper than the industry: Crown Holdings has a trailing 12-month EV/EBITDA ratio of 9.5, while the industry's average trailing 12-month EV/EBITDA is 11.9.

Further, the company has a return on equity — a profitability measure — of 54.3%, better than the industry average of 24.3%. This reflects the company’s efficiency in utilizing its shareholders’ funds.

Crown Holdings, Inc. Price and Consensus

Stocks to Consider

A few better-ranked stocks in the Industrial Products sector are The Timken Company (TKR - Free Report) , Roper Technologies, Inc. (ROP - Free Report) and Harsco Corporation , each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Timken Company has an estimated earnings growth rate of 26.5% for the ongoing year. The company’s shares have gained 16%, in the past year.

Roper Technologies has an expected earnings growth rate of 9.4% for the current year. The stock has appreciated 34.5% in a year’s time.

Harsco has a projected earnings growth rate of 9.1% for 2019. The company’s shares have rallied 12.7%, over the past year.

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