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Ball Corp (BALL) Considering Options for Aerospace Business
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Ball Corporation (BALL - Free Report) has announced that it is exploring options for its aerospace segment that will provide value to shareholders and customers. This has been in response to a recent report that the company is contemplating a divestment of the business and has already generated interest from large defense companies.
The company’s shares got a boost as it is perceived that this move will help BALL focus more on its beverage packaging operations and lower its debt levels. Ball Corp however stated that there is no certainty that any formal decision will be made.
The Aerospace unit consists of operations that manufacture and sell aerospace and other related products and provide services to the defense, civil space and commercial space industries. It generated 13% of the company’s sales and 12% of the total segment operating income in 2022.
In the first quarter of 2023, the Aerospace segment’s sales were $508 million, which marked a 0.8% improvement year over year. Operating earnings increased 39.5% to $60 million. At the end of the quarter, the segment’s contracted backlog was $2.8 billion. Contracts already won but not yet booked into the current contracted backlog were $5 billion. The segment continues to win defense, climate change and Earth-monitoring contracts to provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers.
The possible sale will aid Ball Corp in boosting its beverage can capacity. This will help the company capitalize on the growing demand for beverage cans. Customers now prefer cans over plastic owing to increasing awareness about the environment. Changing lifestyle choices, population growth and increasing disposable income have led to this shift. An estimated 75% of new beverage product launches are now in cans.
The company envisions global volume growth of 4% for the foreseeable future and has been investing in capacity to meet this demand. By 2025, the global beverage can industry is projected to grow by approximately 100 billion units. Of this, the company eyes an opportunity to add as many as 45 billion units.
Ball Corp’s long-term debt was $7.3 billion at the end of Mar 31, 2023. Despite the company’s efforts to lower debt levels, the total debt to total capital ratio remained high at 0.72 as of Mar 31, 2022. It is expected that the company will deploy the sale proceeds to lower its elevated debt levels.
Price Performance
The company’s shares have lost 14.3% over the past year compared with the industry’s 7.3% decline.
Image Source: Zacks Investment Research
Zacks Rank and Key Picks
Ball Corp currently carries a Zacks Rank #3 (Hold).
Hubbell has an average trailing four-quarter earnings surprise of 21%. The Zacks Consensus Estimate for HUBB’s fiscal 2023 earnings is pegged at $13.81 per share. The consensus estimate for 2023 earnings has moved 22.5% north in the past 60 days. Its shares have gained 87% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share. The consensus estimate for 2023 earnings has moved 63.5% north in the past 60 days. MTW’s shares have gained 66.8% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.83, up 7.6% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW has gained 65.7% in the last year.
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Ball Corp (BALL) Considering Options for Aerospace Business
Ball Corporation (BALL - Free Report) has announced that it is exploring options for its aerospace segment that will provide value to shareholders and customers. This has been in response to a recent report that the company is contemplating a divestment of the business and has already generated interest from large defense companies.
The company’s shares got a boost as it is perceived that this move will help BALL focus more on its beverage packaging operations and lower its debt levels. Ball Corp however stated that there is no certainty that any formal decision will be made.
The Aerospace unit consists of operations that manufacture and sell aerospace and other related products and provide services to the defense, civil space and commercial space industries. It generated 13% of the company’s sales and 12% of the total segment operating income in 2022.
In the first quarter of 2023, the Aerospace segment’s sales were $508 million, which marked a 0.8% improvement year over year. Operating earnings increased 39.5% to $60 million. At the end of the quarter, the segment’s contracted backlog was $2.8 billion. Contracts already won but not yet booked into the current contracted backlog were $5 billion. The segment continues to win defense, climate change and Earth-monitoring contracts to provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers.
The possible sale will aid Ball Corp in boosting its beverage can capacity. This will help the company capitalize on the growing demand for beverage cans. Customers now prefer cans over plastic owing to increasing awareness about the environment. Changing lifestyle choices, population growth and increasing disposable income have led to this shift. An estimated 75% of new beverage product launches are now in cans.
The company envisions global volume growth of 4% for the foreseeable future and has been investing in capacity to meet this demand. By 2025, the global beverage can industry is projected to grow by approximately 100 billion units. Of this, the company eyes an opportunity to add as many as 45 billion units.
Ball Corp’s long-term debt was $7.3 billion at the end of Mar 31, 2023. Despite the company’s efforts to lower debt levels, the total debt to total capital ratio remained high at 0.72 as of Mar 31, 2022. It is expected that the company will deploy the sale proceeds to lower its elevated debt levels.
Price Performance
The company’s shares have lost 14.3% over the past year compared with the industry’s 7.3% decline.
Image Source: Zacks Investment Research
Zacks Rank and Key Picks
Ball Corp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Hubbell Incorporated (HUBB - Free Report) , The Manitowoc Company, Inc. (MTW - Free Report) and W.W. Grainger, Inc. (GWW - Free Report) . HUBB and MTW sport a Zacks Rank #1 (Strong Buy) at present, and GWW carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hubbell has an average trailing four-quarter earnings surprise of 21%. The Zacks Consensus Estimate for HUBB’s fiscal 2023 earnings is pegged at $13.81 per share. The consensus estimate for 2023 earnings has moved 22.5% north in the past 60 days. Its shares have gained 87% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share. The consensus estimate for 2023 earnings has moved 63.5% north in the past 60 days. MTW’s shares have gained 66.8% in the last year.
The Zacks Consensus Estimate for Grainger’s 2023 earnings per share is pegged at $35.83, up 7.6% in the past 60 days. It has a trailing four-quarter average earnings surprise of 9.1%. GWW has gained 65.7% in the last year.