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Crown Holdings (CCK) Hits New 52-Week High: What's Driving it?

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Crown Holdings, Inc. (CCK - Free Report) scaled a fresh 52-week high of $128.48 during the trading session on Mar 16, before retracting to close at $126.04. Surging demand for beverage cans the company’s investments in the construction of new can plants and the addition of new production lines to existing facilities to meet the same, are driving share price appreciation.

Price Performance

Crown Holdings’ shares have gained 32.1% in the past year compared with the industry’s growth of 16.3%.

Zacks Investment Research
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Driving Factors

In the past few years, demand for beverage cans has been growing as it is the world’s most sustainable and recycled beverage packaging. An estimated 75% of new beverage product launches are now in cans. Crown Holdings has been focusing on growing its global beverage can business to tap strong demand growth. Demand will continue to outstrip supply in most global markets for the foreseeable future. Markets such as North America, Europe and Mexico are experiencing higher volumes and market expansion on the increase in beverage consumption.

In North America, beverage can growth has been on the rise in recent years as new beverage products are being introduced in cans compared with other packaging formats. In 2021, 15 billion can units were imported in the United States. Crown Holdings completed the construction on four production lines across the Americas Beverage segment in 2021 to capitalize on growing demand trends. The segment is set to commercialize an additional seven lines in 2022 and 2023. CCK’s Transit Packaging segment is gaining from increased food can volumes, higher beverage can equipment deliveries and contractual recovery of inflation.

Crown Holdings continues to implement several expansion projects, including the construction of new plants and the addition of production lines to existing facilities to meet escalating can demand. To this end, the company commercialized significant beverage can capacity at new plants in Bowling Green, KY, and Vung Tau, Vietnam. CCK also added new production lines to its existing facilities in Olympia, WA, Rio Verde, Brazil and Hanoi, Vietnam in 2021. In the current year, Crown Holdings expects to commercialize new production capacity at new plants in Martinsville, Virginia and Uberaba, Brazil, coupled with can line additions to plants in Phnom Penh, Cambodia and Monterrey, Mexico.

Crown Holdings recently announced to build a new beverage can facility in Peterborough, U.K., which is expected to commence operation during second-quarter 2022, with the first production line expected to come online during second-quarter 2023.

Crown Holdings is focused on disciplined pricing, cost control and capital allocation. The company's primary capital-allocation focus will be to reduce leverage while still investing in its business. It continues to pursue growth opportunities through capacity additions to existing plants, new plants in existing markets, strategic acquisitions in geographic areas and product lines and making share repurchases.

Crown Holdings’ fourth-quarter 2021 sales and earnings per share (EPS) increased year over year and beat the Zacks Consensus Estimate on both counts. Increased beverage can and transit packaging sales unit volumes as well as pass through of higher material costs led to improved results. For the current year, the company anticipates adjusted EPS in the range of $8.00-$8.20. In 2021, CCK reported an adjusted EPS of $7.66.

Positive Growth Projections

The Zacks Consensus Estimate for 2022 earnings is currently pegged at $8.19, suggesting year-over-year growth of 6.9%. The estimate has been revised upward by 4.6% in the past 60 days.

Zacks Rank and Other Stocks to Consider

Crown Holdings currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the Industrial Products sector include Applied Industrial Technologies, Inc. (AIT - Free Report) , AGCO Corporation (AGCO - Free Report) and Silgan Holdings Inc. (SLGN - Free Report) . While AIT sports a Zacks Rank #1, AGCO and SLGN carry a Zacks Rank #2 (Buy) at present.

Applied Industrial Technologies reported adjusted EPS of $1.46 in second-quarter fiscal 2022 (ended Dec 31, 2021), up 49% year on 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 year earnings has moved up 9.4% in the past 60 days. AIT’s shares have appreciated 12.6% in a year.

AGCO Corp's fourth-quarter 2021 adjusted EPS increased 100% year over year to $3.08, beating the Zacks Consensus Estimate of $1.72. AGCO has a trailing four-quarter earnings surprise of 56.6%, on average.

AGCO Corp has an estimated earnings growth rate of around 12.4% for 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 10.5%.

Silgan Holdings’ fourth-quarter 2021 adjusted EPS increased 32% year over year to a record 79 cents, beating the Zacks Consensus Estimate of 73 cents. SLGN has a trailing four-quarter earnings surprise of 3.8%, on average.

Silgan has a projected earnings growth rate of 13.5% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 3% in the past 60 days. In a year, SLGN has moved up 7.8%.