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What Makes Silgan (SLGN) an Attractive Investment Pick
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Silgan Holdings Inc. (SLGN - Free Report) is witnessing robust demand for vital products like food, beverage, consumer health and personal care products amid the coronavirus pandemic. The acquisition of Albea’s dispensing business will strengthen its position in the dispensing markets and will also be accretive to earnings. Further, the company’s constant evaluation for opportunities to reduce costs across each of its businesses will continue to drive margin performance.
At present, Silgan carries a Zacks Rank #2 (Buy). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best investment opportunities for investors. You can see the complete list of today's Zacks #1 Rank stocks here.
In the past year, the stock has gained 28.5% compared with the industry’s rally of 22.3%.
Let’s check out the factors that make the stock an attractive bet.
Better-Than-Expected Q2 Results: Silgan reported second-quarter 2020 adjusted earnings of 85 cents per share, handily beating the Zacks Consensus Estimate of 63 cents. Further, earnings improved 54.5% year over year aided by solid demand growth across food, health and hygiene products.
Upbeat Earning Guidance: Backed by its strong earnings performance in the first half of 2020, Silgan raised its adjusted earnings per share guidance for 2020 to $2.70 and $2.85 during its second-quarter conference call. The mid-point of the guidance indicates a 28% year-over-year increase from $2.16 in 2019. The guidance factors in strong demand for food and consumer health and hygiene products as well as the acquisition of Albea’s dispensing business.
Positive Earnings Surprise History: Silgan has a trailing four-quarter earnings surprise of 12.8%, on average.
Upbeat Growth Estimates: Silgan has delivered an earnings growth rate of 13.3% over the past five years, outperforming the industry’s earnings growth of 11%. The momentum is expected to continue, as the Zacks Consensus Estimate for the company’s current year’s earnings suggests year-over-year growth of 32% and 2% for the next year. The company also has a long-term estimated earnings growth rate of 5%.
Northbound Earnings Estimates: Silgan’s current-year earnings estimates have been revised upward by 19% to $2.85 per share over the past 90 days. The same for 2021 has moved 14% north to $2.91.
Return on Assets: Silgan currently has a Return on Assets (ROA) of 5.2%, while the industry recorded ROA of 5.1%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Pandemic-Driven Demand to Fuel Top Line: Silgan has been witnessing solid volumes in all of its segments owing to the surge in demand for vital products like food, beverage and consumer health and personal care products amid the coronavirus crisis. Notably, all of its global production facilities have remained open, and each of the businesses are operating at peak productivity levels. Demand levels remain high and the company is witnessing strong volume gains even in regions where stay-at-home requirements have been eased.
Acquisitions are a Key Growth Driver: In June, Silgan closed the previously-announced acquisition of Albea’s dispensing business. It is a strategic fit for the closures business and is likely to strengthen the company’s position in the dispensing markets. This buyout is expected to modestly boost Silgan’s earnings in 2020 and be more accretive as synergies are phased in over the next 18 months. These synergies would be achieved primarily through reductions in general and administrative expenses, procurement savings and manufacturing efficiencies. Silgan Holdings also acquired Cobra Plastics, Inc. in February in a bid to expand closures franchise into new markets.
Cost Savings to Aid Margins: Silgan continually evaluates cost-reduction opportunities across each of its businesses, including rationalizations of existing facilities through plant closures and downsizings. It has a disciplined approach to identify opportunities that generate attractive cash returns. In sync with this, Silgan had announced an expanded footprint optimization plan in the metal container business. It is expected to reduce capacity by more than 0.5 billion units and continue to aid further cost reductions. Per the plan, the company intends to close six plants, two of which were closed in 2019.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector include Titan International, Inc. , Tetra Tech Inc. (TTEK - Free Report) and Fortune Brands Home & Security, Inc. , each carrying a Zacks Rank of 2 (Buy), currently.
Titan International has an estimated earnings growth rate of 21.1% for 2020. The company’s shares have gained 29% in a year’s time.
Tetra Tech has a projected earnings growth rate of 6.6% for fiscal 2020. Shares of the company have appreciated 23% over the past year.
Fortune Brands has an expected earnings growth rate of 6.9% for the current year. The stock has surged 59% over the past year.
More Stock News: This Is Bigger than the iPhone!
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 2021.
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What Makes Silgan (SLGN) an Attractive Investment Pick
Silgan Holdings Inc. (SLGN - Free Report) is witnessing robust demand for vital products like food, beverage, consumer health and personal care products amid the coronavirus pandemic. The acquisition of Albea’s dispensing business will strengthen its position in the dispensing markets and will also be accretive to earnings. Further, the company’s constant evaluation for opportunities to reduce costs across each of its businesses will continue to drive margin performance.
At present, Silgan carries a Zacks Rank #2 (Buy). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 or 3 (Hold), offer the best investment opportunities for investors. You can see the complete list of today's Zacks #1 Rank stocks here.
In the past year, the stock has gained 28.5% compared with the industry’s rally of 22.3%.
Let’s check out the factors that make the stock an attractive bet.
Better-Than-Expected Q2 Results: Silgan reported second-quarter 2020 adjusted earnings of 85 cents per share, handily beating the Zacks Consensus Estimate of 63 cents. Further, earnings improved 54.5% year over year aided by solid demand growth across food, health and hygiene products.
Upbeat Earning Guidance: Backed by its strong earnings performance in the first half of 2020, Silgan raised its adjusted earnings per share guidance for 2020 to $2.70 and $2.85 during its second-quarter conference call. The mid-point of the guidance indicates a 28% year-over-year increase from $2.16 in 2019. The guidance factors in strong demand for food and consumer health and hygiene products as well as the acquisition of Albea’s dispensing business.
Positive Earnings Surprise History: Silgan has a trailing four-quarter earnings surprise of 12.8%, on average.
Upbeat Growth Estimates: Silgan has delivered an earnings growth rate of 13.3% over the past five years, outperforming the industry’s earnings growth of 11%. The momentum is expected to continue, as the Zacks Consensus Estimate for the company’s current year’s earnings suggests year-over-year growth of 32% and 2% for the next year. The company also has a long-term estimated earnings growth rate of 5%.
Northbound Earnings Estimates: Silgan’s current-year earnings estimates have been revised upward by 19% to $2.85 per share over the past 90 days. The same for 2021 has moved 14% north to $2.91.
Return on Assets: Silgan currently has a Return on Assets (ROA) of 5.2%, while the industry recorded ROA of 5.1%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Pandemic-Driven Demand to Fuel Top Line: Silgan has been witnessing solid volumes in all of its segments owing to the surge in demand for vital products like food, beverage and consumer health and personal care products amid the coronavirus crisis. Notably, all of its global production facilities have remained open, and each of the businesses are operating at peak productivity levels. Demand levels remain high and the company is witnessing strong volume gains even in regions where stay-at-home requirements have been eased.
Acquisitions are a Key Growth Driver: In June, Silgan closed the previously-announced acquisition of Albea’s dispensing business. It is a strategic fit for the closures business and is likely to strengthen the company’s position in the dispensing markets. This buyout is expected to modestly boost Silgan’s earnings in 2020 and be more accretive as synergies are phased in over the next 18 months. These synergies would be achieved primarily through reductions in general and administrative expenses, procurement savings and manufacturing efficiencies. Silgan Holdings also acquired Cobra Plastics, Inc. in February in a bid to expand closures franchise into new markets.
Cost Savings to Aid Margins: Silgan continually evaluates cost-reduction opportunities across each of its businesses, including rationalizations of existing facilities through plant closures and downsizings. It has a disciplined approach to identify opportunities that generate attractive cash returns. In sync with this, Silgan had announced an expanded footprint optimization plan in the metal container business. It is expected to reduce capacity by more than 0.5 billion units and continue to aid further cost reductions. Per the plan, the company intends to close six plants, two of which were closed in 2019.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector include Titan International, Inc. , Tetra Tech Inc. (TTEK - Free Report) and Fortune Brands Home & Security, Inc. , each carrying a Zacks Rank of 2 (Buy), currently.
Titan International has an estimated earnings growth rate of 21.1% for 2020. The company’s shares have gained 29% in a year’s time.
Tetra Tech has a projected earnings growth rate of 6.6% for fiscal 2020. Shares of the company have appreciated 23% over the past year.
Fortune Brands has an expected earnings growth rate of 6.9% for the current year. The stock has surged 59% over the past year.
More Stock News: This Is Bigger than the iPhone!
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 2021.
Click here for the 6 trades >>