We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Ball Corp (BLL) Rides on Beverage Can Demand Despite Cost Woes
Read MoreHide Full Article
Ball Corporation is poised to gain from the growing preference for cans over plastic, owing to increasing awareness of environmental problems. The company has been investing in increasing its production capacity to capitalize on this demand. Robust backlog levels and business wins continue to drive the Aerospace segment. Focus on launching products and efforts to cut down costs will aid its results as well.
However, supply constraints, start-up costs related to the increased capacity coming online and high debt levels remain concerning.
Solid Demand for Beverage Cans to Fuel Growth
Changing lifestyle choices, population growth, increasing disposable income and awareness regarding the environment has led to the unprecedented demand for the beverage can industry. An estimated 75% of beverage product launches are now in cans.
By 2025, the global beverage can industry is projected to grow by 100 billion units. Ball Corp is aggressively investing in capacity to capitalize on the demand. The company delivered on its target to end 2021 with 12 billion units of new installed capacity and expects to end this year with another 12 billion units of new installed capacity. It is on track to add at least 25 billion units of capacity by 2023 end.
Aluminum Cup Business to Act as a Key Catalyst
The company has successfully launched its infinitely recyclable aluminum cup in more than 18,000 food, drug and mass retailers in the United States. It is providing 16-ounce, 20-ounce and 24-ounce aluminum cups to numerous sports and entertainment venues as COVID-related restrictions moderate. The company continues to expect the cup business to deliver profits starting from late 2022.
Aerospace Segment Poised Well
The contracted backlog at the Aerospace segment, which contributes around 14% to the company’s revenues, was at $2.5 billion as of 2021-end. Contracts already won but not yet booked into the current contracted backlog was $5 billion. Contracted and won-not-booked backlogs are anticipated to go up this year, and segment earnings remain on track to deliver double-digit growth.
Program execution remains at a high level across the business. The segment continues to win and provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers. Multiple projects to expand manufacturing capacity, test capabilities, and engineering and support workspace are on track.
Costs to Dent Margins
The company might incur higher-than-expected start-up costs due to the ongoing capacity expansion efforts to meet the growing demand for cans. Supply constraints and labor costs will impact results in the near term. Aluminum prices are also trending higher on the back of declining inventories.
Despite the company’s efforts to lower its debt levels, its total debt to total capital ratio remains high at 0.68 as of Dec 31, 2021, which is concerning. High debt levels and the consequent higher interest expenses remain headwinds.
Share Price Performance
Image Source: Zacks Investment Research
The company’s shares have appreciated 4% over the past year compared with the industry’s rally of 9.9%.
Zacks Rank and Stocks to Consider
Ball Corp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Packaging Corporation of America (PKG - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Dover Corporation (DOV - Free Report) . While PKG and AIT currently sport a Zacks Rank #1 (Strong Buy), DOV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Packaging Corp’s fourth-quarter 2021 adjusted EPS soared 108% year over year to $2.76, beating the Zacks Consensus Estimate of $2.08. PKG has a trailing four-quarter earnings surprise of 22.8%, on average.
Packaging Corp has an estimated earnings growth rate of 11.5% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 11.6%. PKG’s shares have gained around 4% in a year.
Applied Industrial Technologies reported adjusted EPS of $1.46 in second-quarter fiscal 2022 (ended Dec 31, 2020), up 49% year over year and beating the Zacks Consensus Estimate of $1.09. AIT has a trailing four-quarter earnings surprise of 27.9%, on average.
Applied Industrial Technologies has an expected earnings growth rate of 24.8% for fiscal 2022. The Zacks Consensus Estimate for fiscal 2022 earnings has moved up 9.4% in the past 60 days. AIT’s shares have appreciated 8% in a year.
Dover’s fourth-quarter 2021 adjusted EPS increased 15% year over year to $1.78, beating the Zacks Consensus Estimate of $1.66. DOV has a trailing four-quarter earnings surprise of 12.3%, on average.
Dover has an estimated earnings growth rate of 12.7% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 4%. DOV’s shares have rallied around 12% in a year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Ball Corp (BLL) Rides on Beverage Can Demand Despite Cost Woes
Ball Corporation is poised to gain from the growing preference for cans over plastic, owing to increasing awareness of environmental problems. The company has been investing in increasing its production capacity to capitalize on this demand. Robust backlog levels and business wins continue to drive the Aerospace segment. Focus on launching products and efforts to cut down costs will aid its results as well.
However, supply constraints, start-up costs related to the increased capacity coming online and high debt levels remain concerning.
Solid Demand for Beverage Cans to Fuel Growth
Changing lifestyle choices, population growth, increasing disposable income and awareness regarding the environment has led to the unprecedented demand for the beverage can industry. An estimated 75% of beverage product launches are now in cans.
By 2025, the global beverage can industry is projected to grow by 100 billion units. Ball Corp is aggressively investing in capacity to capitalize on the demand. The company delivered on its target to end 2021 with 12 billion units of new installed capacity and expects to end this year with another 12 billion units of new installed capacity. It is on track to add at least 25 billion units of capacity by 2023 end.
Aluminum Cup Business to Act as a Key Catalyst
The company has successfully launched its infinitely recyclable aluminum cup in more than 18,000 food, drug and mass retailers in the United States. It is providing 16-ounce, 20-ounce and 24-ounce aluminum cups to numerous sports and entertainment venues as COVID-related restrictions moderate. The company continues to expect the cup business to deliver profits starting from late 2022.
Aerospace Segment Poised Well
The contracted backlog at the Aerospace segment, which contributes around 14% to the company’s revenues, was at $2.5 billion as of 2021-end. Contracts already won but not yet booked into the current contracted backlog was $5 billion. Contracted and won-not-booked backlogs are anticipated to go up this year, and segment earnings remain on track to deliver double-digit growth.
Program execution remains at a high level across the business. The segment continues to win and provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers. Multiple projects to expand manufacturing capacity, test capabilities, and engineering and support workspace are on track.
Costs to Dent Margins
The company might incur higher-than-expected start-up costs due to the ongoing capacity expansion efforts to meet the growing demand for cans. Supply constraints and labor costs will impact results in the near term. Aluminum prices are also trending higher on the back of declining inventories.
Despite the company’s efforts to lower its debt levels, its total debt to total capital ratio remains high at 0.68 as of Dec 31, 2021, which is concerning. High debt levels and the consequent higher interest expenses remain headwinds.
Share Price Performance
Image Source: Zacks Investment Research
The company’s shares have appreciated 4% over the past year compared with the industry’s rally of 9.9%.
Zacks Rank and Stocks to Consider
Ball Corp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Industrial Products sector are Packaging Corporation of America (PKG - Free Report) , Applied Industrial Technologies, Inc. (AIT - Free Report) and Dover Corporation (DOV - Free Report) . While PKG and AIT currently sport a Zacks Rank #1 (Strong Buy), DOV carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Packaging Corp’s fourth-quarter 2021 adjusted EPS soared 108% year over year to $2.76, beating the Zacks Consensus Estimate of $2.08. PKG has a trailing four-quarter earnings surprise of 22.8%, on average.
Packaging Corp has an estimated earnings growth rate of 11.5% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 11.6%. PKG’s shares have gained around 4% in a year.
Applied Industrial Technologies reported adjusted EPS of $1.46 in second-quarter fiscal 2022 (ended Dec 31, 2020), up 49% year over year and beating the Zacks Consensus Estimate of $1.09. AIT has a trailing four-quarter earnings surprise of 27.9%, on average.
Applied Industrial Technologies has an expected earnings growth rate of 24.8% for fiscal 2022. The Zacks Consensus Estimate for fiscal 2022 earnings has moved up 9.4% in the past 60 days. AIT’s shares have appreciated 8% in a year.
Dover’s fourth-quarter 2021 adjusted EPS increased 15% year over year to $1.78, beating the Zacks Consensus Estimate of $1.66. DOV has a trailing four-quarter earnings surprise of 12.3%, on average.
Dover has an estimated earnings growth rate of 12.7% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 4%. DOV’s shares have rallied around 12% in a year.