Ball Authorizes Buyback

Ball Corporation (BLL - Analyst Report) announced to buyback an approximate $200 million of common stock. It has opted for an accelerated stock repurchase program with JPMorgan Chase & Co. (JPM - Analyst Report) in a privately negotiated transaction.

Ball Corp. would repurchase the stocks using cash on hand and available borrowings. The transaction would reduce its common stock approximately by 5.1 million shares.

Ball Corp. continues to enhance shareholders value through repurchase and payment of dividends to the shareholders. Earlier, in January 2012, the company decided to repurchase an aggregate of 30 million of its common stock. The repurchase authorization replaced all the previous authorizations.

The company also raised cash dividend by nearly 43% to 10 cents per share. Ball corp. is scheduled to pay the increased cash dividend of 10 cents on March 15, 2012, to shareholders of record on March 1, 2012.

Enjoying a strong financial position, Ball Corp. has cash and cash equivalents, as of December 31, 2011 of $165.8 million, while cash flow from operation in 2011 amounted to $956.7 million. The sound financial position enables the company to carry on with its share repurchase program.

Management expects to generate cash flow of approximately $450 million in 2012. The majority of the cash flow generated would be used for repurchasing stocks in future. Moreover, the company plans to achieve 10% to 15% earnings growth in 2012 and beyond.

The company is trying to focus on its core business. It has sold its plastic pail assets which lie outside its strategic focus area. Alongside, the expansion of its global metal beverage can business is also on the cards. Accordingly, Ball acquired four low-cost metal beverage packaging manufacturing plants from AB InBev in the U.S. It has also announced its intent to acquire the remaining 65% interest in a joint venture metal beverage can business and end plant in China.

However, in the recently concluded quarter Ball Corporation’s earnings fell nearly 11% to 47 cents per share. The poor performance can be ascribed to the weaker 12-ounce beverage can volumes in North America and Europe in addition to six fewer accounting days. Moreover, sales in the company’s Metal Food and & Household Products Packaging (Americas) and Aerospace segment declined in the reported quarter.

Currently, the shares of Ball Corp. maintain Zacks #3 Rank (Hold rating) over the short run. It faces competition from Crown Holdings Inc. (CCK - Snapshot Report), Rexam Plc. (REXMY) and Silgan Holdings Inc. (SLGN - Analyst Report).

Based in Broomfield, Colorado, Ball Corp. is a manufacturer of metal and plastic packaging, primarily for beverages and foods. It also supplies aerospace and other technologies and services to government and commercial customers.