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Sealed Air (SEE) Gains 23% YTD: What's Driving the Stock?
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Shares of Sealed Air Corporation (SEE - Free Report) have been gaining on forecast-topping first-quarter 2021 results, ongoing strength in packaging demand for food, medical supplies and consumer staples, and increased e-commerce activity amid the coronavirus pandemic. The ongoing benefits from its Reinvent SEE Strategy on earnings performance has also been contributing to the price rally.
Sealed Air has an expected long-term earnings per share growth rate of 8.2%. The company has a trailing four-quarter earnings surprise of 21.4%, on average.
The company’s current-year earnings estimates have been revised upward by 5% over the past 30 days and the same for 2021 has moved north by 6%. The Zacks Consensus Estimate for earnings for 2021 is currently pegged at $3.49, which suggests year-over-year growth of 9.4%. The same for 2022 stands is $3.85, indicating year-over-year improvement of 10.3%.
Share Price Performance
The stock has gained 23.3% year to date, compared with the industry’s growth of 11.1%.
Driving Factors
Improved Q1 Results: Sealed Air reported adjusted earnings per share of 78 cents, surpassing the Zacks Consensus Estimate of 71 cents. The bottom line also improved 7% year over year on higher volumes and benefits from the company’s Reinvent SEE initiatives.
Upbeat Guidance: For 2021, Sealed Air expects net sales in the range of $5.25 billion to $5.35 billion. This indicates an improvement of 7% to 9% as reported and 6% to 8% in constant dollars, courtesy of increased volume and prices.
Pandemic-Induced Demand to Fuel Top Line: Around 63% 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 the shift in demand for case ready, shrink bags and pre-packaged meals and snacks designed for home consumption amid the pandemic-induced restrictions.
In the medical and life sciences portfolio, demand for protected packaging solutions for medical supplies, pharmaceuticals, and personal protective equipment remains high. It is also gaining from growth in online shipments of medical equipment and pharmaceuticals. The company is witnessing increased demand for temperature assurance packaging solution that ensures safe and secure distribution of COVID-19 vaccines. Further, e-commerce sales, which contribute around 14% to the company’s sales, have been on the rise 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 $355 million of Reinvent SEE benefits.
Automation, Acquisitions Remain Catalysts: Sealed Air’s focus on automation, digital and sustainability is expected to drive above-market growth in its core business, enabling it to expand into new and adjacent markets. The company’s pipeline for automated equipment continues to improve, and it has set a target of over $500 million by 2025.
The acquisition of Automated Packaging Systems strengthened Sealed Air’s automated solutions and sustainable packaging offerings. The buyout of AFP, Inc. expanded its protective packaging solutions in the electronics, transportation and industrial markets with custom-engineered applications. AFP along with the prior acquisition of Fagerdala 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 & Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
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Sealed Air (SEE) Gains 23% YTD: What's Driving the Stock?
Shares of Sealed Air Corporation (SEE - Free Report) have been gaining on forecast-topping first-quarter 2021 results, ongoing strength in packaging demand for food, medical supplies and consumer staples, and increased e-commerce activity amid the coronavirus pandemic. The ongoing benefits from its Reinvent SEE Strategy on earnings performance has also been contributing to the price rally.
Sealed Air has an expected long-term earnings per share growth rate of 8.2%. The company has a trailing four-quarter earnings surprise of 21.4%, on average.
The company’s current-year earnings estimates have been revised upward by 5% over the past 30 days and the same for 2021 has moved north by 6%. The Zacks Consensus Estimate for earnings for 2021 is currently pegged at $3.49, which suggests year-over-year growth of 9.4%. The same for 2022 stands is $3.85, indicating year-over-year improvement of 10.3%.
Share Price Performance
The stock has gained 23.3% year to date, compared with the industry’s growth of 11.1%.
Driving Factors
Improved Q1 Results: Sealed Air reported adjusted earnings per share of 78 cents, surpassing the Zacks Consensus Estimate of 71 cents. The bottom line also improved 7% year over year on higher volumes and benefits from the company’s Reinvent SEE initiatives.
Upbeat Guidance: For 2021, Sealed Air expects net sales in the range of $5.25 billion to $5.35 billion. This indicates an improvement of 7% to 9% as reported and 6% to 8% in constant dollars, courtesy of increased volume and prices.
Pandemic-Induced Demand to Fuel Top Line: Around 63% 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 the shift in demand for case ready, shrink bags and pre-packaged meals and snacks designed for home consumption amid the pandemic-induced restrictions.
In the medical and life sciences portfolio, demand for protected packaging solutions for medical supplies, pharmaceuticals, and personal protective equipment remains high. It is also gaining from growth in online shipments of medical equipment and pharmaceuticals. The company is witnessing increased demand for temperature assurance packaging solution that ensures safe and secure distribution of COVID-19 vaccines. Further, e-commerce sales, which contribute around 14% to the company’s sales, have been on the rise 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 $355 million of Reinvent SEE benefits.
Automation, Acquisitions Remain Catalysts: Sealed Air’s focus on automation, digital and sustainability is expected to drive above-market growth in its core business, enabling it to expand into new and adjacent markets. The company’s pipeline for automated equipment continues to improve, and it has set a target of over $500 million by 2025.
The acquisition of Automated Packaging Systems strengthened Sealed Air’s automated solutions and sustainable packaging offerings. The buyout of AFP, Inc. expanded its protective packaging solutions in the electronics, transportation and industrial markets with custom-engineered applications. AFP along with the prior acquisition of Fagerdala 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 & Stocks to Consider
Sealed Air currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector include Deere & Company (DE - Free Report) , Avery Dennison Corporation (AVY - Free Report) and Caterpillar Inc. (CAT - Free Report) . All of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Deere has a projected earnings growth rate of 84.2% for fiscal 2021. Shares of the company have gained 34% so far this year.
Avery Dennison has an estimated earnings growth rate of 20.8% for 2021. The company’s shares have rallied 41% year to date.
Caterpillar has an expected earnings growth rate of 45.6% for the ongoing year. Year to date, the stock has appreciated 31%.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency have sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>