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Reasons to Hold AptarGroup (ATR) Stock in Your Portfolio Now
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AptarGroup, Inc. (ATR - Free Report) is poised well to grow on its ongoing business-transformation plan to drive the top line, boost operational excellence, enhance approach to innovation and improve organizational effectiveness. Further, the company’s strategy to grow via acquisitions remains a key catalyst. Increasing demand for pharmaceutical products on account of the coronavirus pandemic is likely to drive Pharma segment in the near term.
The stock has long-term expected earnings per share growth rate of 7%. Year to date, the stock has gained 2.5%, against the industry’s decline of 1.0%.
At present, AptarGroup carries a Zacks Rank #3 (Hold). It has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities for investors. You can see the complete list of today's Zacks #1 Rank stocks here.
Let’s delve deeper and analyze the factors that substantiate the company’s Zacks Rank #3.
Better-Than-Expected Q2 Results
AptarGroup delivered second-quarter 2020 adjusted earnings per share of 80 cents, which surpassed the Zacks Consensus Estimate of 68 cents. Total revenues were $699.3 million for the quarter, which beat the Zacks Consensus Estimate of $655 million.
Positive Earnings Surprise History
The company has a trailing four-quarter earnings surprise of 5.6%, on average.
Return on Assets
AptarGroup currently has a Return on Assets (ROA) of 6.3%, while the industry recorded ROA of 5.4%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Upward Estimate Revisions
AptarGroup’s earnings estimates for the ongoing quarter has been revised upward by 2% over the past 30 days to 84 cents. For fiscal 2020 and fiscal 2021, the estimate has moved north by 3% and 2%, respectively.
Pharma Segment Remains Strong
The Pharma segment, which generated around 38% of AptarGroup's sales in fiscal 2019, has been witnessing sales growth across each end market with particularly strong growth in the injectables and active packaging businesses. This is likely to persist amid the coronavirus pandemic. Notably, the segment continues to receive inquiries from the healthcare industry on an almost-daily basis.
Cost Reduction Actions to Sustain Margins
AptarGroup has undertaken several cost control measures that include reducing temporary labor headcount, furloughs and wage reductions, and elimination of business travel. The company has also cut down on discretionary spending and modifying production schedules. This will help sustain margins.
Acquisitions Remain a Key Catalyst
AptarGroup remains committed to business expansion through acquisitions to expand the scope of technologies, geographic presence and product offerings. Notable acquisitions include Fusion Packaging, Nanopharm, Gateway Analytical, CSP Technologies, Noble International.
Business Transformation Plan to Reap Benefits
AptarGroup is focused on growing business-transformation plan to drive top-line growth, boosting operational excellence, enhancing its approach to innovation and improving organizational effectiveness.
In sync with the plan, the company has been launching innovative products that will provide it a competitive edge. AptarGroup’s active material sciences technologies is featured on U.S FDA approved implantable rechargeable device, which is used to treat urinary and bowel dysfunction by Axonics Modulation Technologies (AXNX - Free Report) . AptarGroup’s multidose nasal pump features in a new drug application Gimoti — the first and only U.S FDA approved nasally administered treatment for relieving symptoms of acute and recurrent diabetic gastroparesis.
In the Beauty + Home segment, AptarGroup’s spray pump featured on a line of Suave hand sanitizer sprays. The company’s closure and SimpliSqueeze valve was chosen by Dial for the innovative body wash and easy squeeze stand-up pouch. In the Food + Beverage segment, the company’s closure with SimpliSqueeze valve has been chosen by a major peanut butter brand and also featured on a new line of signature sauces and condiments of Chik-Fil-A in the United States. In the beverage market, sports closure has been used in a new sports drinks by Xiaoyangren in China.
However, there are a few factors that are likely to hinder growth in the near term.
The Beauty + Home segment will continue to be negatively impacted by reduced orders from customers providing prestige beauty products. Beauty products are sold via duty free travel and retail stores. Consequently, the restrictions on air travel has impacted the beauty market. Also, many beauty retailers have shut down in response to government mandates to stem the spread of the coronavirus. Also, the Food + Beverage segment will continue to be negatively impacted by decrease in food service and on-the-go beverage closure sales due to the COVID-19 crisis.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) and IIVI Incorporated , both of which sport a Zacks Rank #1.
Silgan has a projected earnings growth rate of 28.7% for the current year. The company’s shares have gained 22% so far this year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 48% year to date.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
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Reasons to Hold AptarGroup (ATR) Stock in Your Portfolio Now
AptarGroup, Inc. (ATR - Free Report) is poised well to grow on its ongoing business-transformation plan to drive the top line, boost operational excellence, enhance approach to innovation and improve organizational effectiveness. Further, the company’s strategy to grow via acquisitions remains a key catalyst. Increasing demand for pharmaceutical products on account of the coronavirus pandemic is likely to drive Pharma segment in the near term.
The stock has long-term expected earnings per share growth rate of 7%. Year to date, the stock has gained 2.5%, against the industry’s decline of 1.0%.
At present, AptarGroup carries a Zacks Rank #3 (Hold). It has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities for investors. You can see the complete list of today's Zacks #1 Rank stocks here.
Let’s delve deeper and analyze the factors that substantiate the company’s Zacks Rank #3.
Better-Than-Expected Q2 Results
AptarGroup delivered second-quarter 2020 adjusted earnings per share of 80 cents, which surpassed the Zacks Consensus Estimate of 68 cents. Total revenues were $699.3 million for the quarter, which beat the Zacks Consensus Estimate of $655 million.
Positive Earnings Surprise History
The company has a trailing four-quarter earnings surprise of 5.6%, on average.
Return on Assets
AptarGroup currently has a Return on Assets (ROA) of 6.3%, while the industry recorded ROA of 5.4%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Upward Estimate Revisions
AptarGroup’s earnings estimates for the ongoing quarter has been revised upward by 2% over the past 30 days to 84 cents. For fiscal 2020 and fiscal 2021, the estimate has moved north by 3% and 2%, respectively.
Pharma Segment Remains Strong
The Pharma segment, which generated around 38% of AptarGroup's sales in fiscal 2019, has been witnessing sales growth across each end market with particularly strong growth in the injectables and active packaging businesses. This is likely to persist amid the coronavirus pandemic. Notably, the segment continues to receive inquiries from the healthcare industry on an almost-daily basis.
Cost Reduction Actions to Sustain Margins
AptarGroup has undertaken several cost control measures that include reducing temporary labor headcount, furloughs and wage reductions, and elimination of business travel. The company has also cut down on discretionary spending and modifying production schedules. This will help sustain margins.
Acquisitions Remain a Key Catalyst
AptarGroup remains committed to business expansion through acquisitions to expand the scope of technologies, geographic presence and product offerings. Notable acquisitions include Fusion Packaging, Nanopharm, Gateway Analytical, CSP Technologies, Noble International.
Business Transformation Plan to Reap Benefits
AptarGroup is focused on growing business-transformation plan to drive top-line growth, boosting operational excellence, enhancing its approach to innovation and improving organizational effectiveness.
In sync with the plan, the company has been launching innovative products that will provide it a competitive edge. AptarGroup’s active material sciences technologies is featured on U.S FDA approved implantable rechargeable device, which is used to treat urinary and bowel dysfunction by Axonics Modulation Technologies (AXNX - Free Report) . AptarGroup’s multidose nasal pump features in a new drug application Gimoti — the first and only U.S FDA approved nasally administered treatment for relieving symptoms of acute and recurrent diabetic gastroparesis.
In the Beauty + Home segment, AptarGroup’s spray pump featured on a line of Suave hand sanitizer sprays. The company’s closure and SimpliSqueeze valve was chosen by Dial for the innovative body wash and easy squeeze stand-up pouch. In the Food + Beverage segment, the company’s closure with SimpliSqueeze valve has been chosen by a major peanut butter brand and also featured on a new line of signature sauces and condiments of Chik-Fil-A in the United States. In the beverage market, sports closure has been used in a new sports drinks by Xiaoyangren in China.
However, there are a few factors that are likely to hinder growth in the near term.
The Beauty + Home segment will continue to be negatively impacted by reduced orders from customers providing prestige beauty products. Beauty products are sold via duty free travel and retail stores. Consequently, the restrictions on air travel has impacted the beauty market. Also, many beauty retailers have shut down in response to government mandates to stem the spread of the coronavirus. Also, the Food + Beverage segment will continue to be negatively impacted by decrease in food service and on-the-go beverage closure sales due to the COVID-19 crisis.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector include Silgan Holdings, Inc. (SLGN - Free Report) and IIVI Incorporated , both of which sport a Zacks Rank #1.
Silgan has a projected earnings growth rate of 28.7% for the current year. The company’s shares have gained 22% so far this year.
IIVI has an estimated earnings growth rate of 29% for the ongoing year. The company’s shares have rallied 48% year to date.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through Q2 2020, while the S&P 500 gained an impressive +44.0%, five of our strategies returned +50.9%, +93.8%, +122.2%, +153.0%, and even +156.8%.
This outperformance has not just been a recent phenomenon. From 2000 – Q2 2020, while the S&P averaged +5.5% per year, our top strategies averaged up to +51.7% per year.
See their latest picks free >>