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Sealed Air (SEE) Hits 52-Week High: What's Driving the Rally?
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Shares of Sealed Air Corporation (SEE - Free Report) scaled a fresh 52-week high of $44.81 during the Nov 17 trading session, before retracting to close at $44.45. Forecast-topping third-quarter 2020 results, ongoing strength in packaging demand for food, medical supplies, consumer staples, and rise in e-commerce demand amid the coronavirus pandemic are driving the rally. Anticipated benefits from its Reinvent SEE Strategy on earnings performance has also been a contributor.
The company has a market capitalization of $6.9 billion. Sealed Air has an expected long-term earnings per share growth rate of 7.7%. The company has a trailing four-quarter earnings surprise of 23.1%, on average.
Sealed Air’s current-year earnings estimates have been revised upward by 5% to $3.09 per share over the past 60 days. The same for 2021 has moved north by 5% to $3.25 per share. The Zacks Consensus Estimate for earnings for 2020 suggests year-over-year growth of 9.6% and the same for 2021, projects a year-over-year growth of 5.1%.
Share Price Performance
The stock has gained 12.1% year to date, compared with the industry’s growth of 10.6%.
Driving Factors
Stellar Q3 Results: Sealed Air’s adjusted earnings per share (EPS) in the quarter was 82 cents, up 28% year over year. Total revenues improved 1.5% year over year to $1,237 million. Both the top and bottom lines beat the Zacks Consensus Estimate.
Upbeat Guidance: Sealed Air hiked EPS guidance to $3.05 for 2020 from its previous guidance of $2.85 to $2.95. The new outlook indicates an increase of 8% from earnings in 2019. Net sales is expected at around $4.85 billion, up from the prior-guided range of $4.725 billion to $4.775 billion. The guidance reflects a year-over-year growth of 1% from 2019.
Strong Demand Amid the Pandemic: Around 64% of Sealed Air’s revenues come from packaging of protein, foods, fluids and goods for the medical and life sciences industries. The food care business continues to benefit from shift in demand for case ready, shrink bags and pre-packaged meals and snacks designed for home consumption amid the pandemic-induced restrictions. Also, demand for protected packaging solutions for medical supplies, pharmaceuticals, and personal protective equipment bodes well for the company’s medical and life sciences portfolio. Further, e-commerce sales, which contribute around 14% to the company’s sales, have been significantly high amid the stay-at-home scenario.
Expected Savings from Reinvent SEE Strategy: In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program, in a bid to drive growth. The new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. One of most vital aspects of this strategy involves investment in technology and resources focusing on new and existing high-growth markets.
In 2020, the company is on track to realize $120 million of incremental benefits to adjusted EBITDA compared to last year. Over the 2019-2021 time period, the company has targeted approximately $340 million of Reinvent SEE benefits.
Acquisitions are Key to Growth: The acquisition of Automated Packaging Systems strengthens Sealed Air’s automated solutions and sustainable packaging offerings. The company had previously acquired AFP, Inc., which expanded its protective packaging solutions in the electronics, transportation and industrial markets with custom-engineered applications.
The company had also acquired Fagerdala, to leverage its manufacturing footprint in Asia, expertise in foam manufacturing and fabrication, and commercial organization to grow sales in the consumer electronics, medical equipment and devices, automotive, temperature assurance, and e-commerce fulfillment sectors. Notably, AFP and Fagerdala buyouts align well with the ship-in-own-container (SIOC) trend in e-commerce. This trend is transforming e-commerce packaging as more distributors want manufacturers to have their primary packaging parcel ready. These acquisitions and investments that the company has been making in its core business will drive growth.
Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Crown Holdings, Inc. (CCK - Free Report) and iRobot Corporation (IRBT - Free Report) . All of these stocks sport a Zacks Rank #1.
AGCO has an estimated earnings growth rate of 15.4% for the ongoing year. The company’s shares have gained 21% year to date.
Crown Holdings has a projected earnings growth rate of 11.7% for 2020. The company’s shares have appreciated 32% so far this year.
iRobot has an expected earnings growth rate of 18.9% for the current year. The stock has surged 54% year to date.
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Sealed Air (SEE) Hits 52-Week High: What's Driving the Rally?
Shares of Sealed Air Corporation (SEE - Free Report) scaled a fresh 52-week high of $44.81 during the Nov 17 trading session, before retracting to close at $44.45. Forecast-topping third-quarter 2020 results, ongoing strength in packaging demand for food, medical supplies, consumer staples, and rise in e-commerce demand amid the coronavirus pandemic are driving the rally. Anticipated benefits from its Reinvent SEE Strategy on earnings performance has also been a contributor.
The company has a market capitalization of $6.9 billion. Sealed Air has an expected long-term earnings per share growth rate of 7.7%. The company has a trailing four-quarter earnings surprise of 23.1%, on average.
Sealed Air’s current-year earnings estimates have been revised upward by 5% to $3.09 per share over the past 60 days. The same for 2021 has moved north by 5% to $3.25 per share. The Zacks Consensus Estimate for earnings for 2020 suggests year-over-year growth of 9.6% and the same for 2021, projects a year-over-year growth of 5.1%.
Share Price Performance
The stock has gained 12.1% year to date, compared with the industry’s growth of 10.6%.
Driving Factors
Stellar Q3 Results: Sealed Air’s adjusted earnings per share (EPS) in the quarter was 82 cents, up 28% year over year. Total revenues improved 1.5% year over year to $1,237 million. Both the top and bottom lines beat the Zacks Consensus Estimate.
Upbeat Guidance: Sealed Air hiked EPS guidance to $3.05 for 2020 from its previous guidance of $2.85 to $2.95. The new outlook indicates an increase of 8% from earnings in 2019. Net sales is expected at around $4.85 billion, up from the prior-guided range of $4.725 billion to $4.775 billion. The guidance reflects a year-over-year growth of 1% from 2019.
Strong Demand Amid the Pandemic: Around 64% of Sealed Air’s revenues come from packaging of protein, foods, fluids and goods for the medical and life sciences industries. The food care business continues to benefit from shift in demand for case ready, shrink bags and pre-packaged meals and snacks designed for home consumption amid the pandemic-induced restrictions. Also, demand for protected packaging solutions for medical supplies, pharmaceuticals, and personal protective equipment bodes well for the company’s medical and life sciences portfolio. Further, e-commerce sales, which contribute around 14% to the company’s sales, have been significantly high amid the stay-at-home scenario.
Expected Savings from Reinvent SEE Strategy: In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — along with a fresh restructuring program, in a bid to drive growth. The new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. One of most vital aspects of this strategy involves investment in technology and resources focusing on new and existing high-growth markets.
In 2020, the company is on track to realize $120 million of incremental benefits to adjusted EBITDA compared to last year. Over the 2019-2021 time period, the company has targeted approximately $340 million of Reinvent SEE benefits.
Acquisitions are Key to Growth: The acquisition of Automated Packaging Systems strengthens Sealed Air’s automated solutions and sustainable packaging offerings. The company had previously acquired AFP, Inc., which expanded its protective packaging solutions in the electronics, transportation and industrial markets with custom-engineered applications.
The company had also acquired Fagerdala, to leverage its manufacturing footprint in Asia, expertise in foam manufacturing and fabrication, and commercial organization to grow sales in the consumer electronics, medical equipment and devices, automotive, temperature assurance, and e-commerce fulfillment sectors. Notably, AFP and Fagerdala buyouts align well with the ship-in-own-container (SIOC) trend in e-commerce. This trend is transforming e-commerce packaging as more distributors want manufacturers to have their primary packaging parcel ready. These acquisitions and investments that the company has been making in its core business will drive growth.
Zacks Rank & Other Stocks to Consider
Sealed Air currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Industrial Products sector include AGCO Corporation (AGCO - Free Report) , Crown Holdings, Inc. (CCK - Free Report) and iRobot Corporation (IRBT - Free Report) . All of these stocks sport a Zacks Rank #1.
AGCO has an estimated earnings growth rate of 15.4% for the ongoing year. The company’s shares have gained 21% year to date.
Crown Holdings has a projected earnings growth rate of 11.7% for 2020. The company’s shares have appreciated 32% so far this year.
iRobot has an expected earnings growth rate of 18.9% for the current year. The stock has surged 54% year to date.
Legal Marijuana: An Investor’s Dream
Imagine getting in early on a young industry primed to skyrocket from $17.7 billion in 2019 to an expected $73.6 billion by 2027.
Although marijuana stocks did better as the pandemic took hold than the market as a whole, they’ve been pushed down. This is exactly the right time to get in on selected strong companies at a fraction of their value before COVID struck. Zacks’ Special Report, Marijuana Moneymakers, reveals 10 exciting tickers for urgent consideration.
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