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Ball Corporation's Results to be Hurt by Concerns in Brazil

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On Oct 4, we issued an updated research report on Ball Corporation (BLL - Free Report) . The company’s performance is likely to be hindered by declines in domestic beer consumption, concerns in Brazil, geopolitical tensions and currency headwinds.

Let’s illustrate these factors in detail.

Declines in Beer Consumption to Hurt Ball Corporation

Ball Corporation witnessed lower volumes owing to softness in domestic beer during second-quarter 2018. Changing consumer preferences in the United States has led to domestic mass beer declines, which is likely to impact the company's North American segment’s performance. Further, Ball Corporation will face headwinds related to currency.

Concerns in Brazil

The truckers' strike in Brazil impacted Ball Corporation's comparable operating earnings by around $10 million during the second quarter. Furthermore, political disruptions owing to the upcoming elections will impact results in the region. Also, the company continues to anticipate tougher year-over-year comparisons in second-half 2018 for the Brazilian business, due to the lack of profit recorded on the INS manufacturing contract in 2017.

Geopolitical Tensions Remain a Woe

The company's performance will be marred by volatile volumes in the EMEA beverage can business due to governmental regulation. Additionally, Saudi Arabia continues to be a very challenging environment for Ball Corporation. It is also facing tight supply-and-demand situation in the global aluminum aerosol business.

Price Performance

Ball Corporation's shares have gained 9% over the past year, against the industry’s decline of around 0.6%.

Zacks Rank & Key Picks

Ball Corporation carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the same sector are W.W. Grainger, Inc. (GWW - Free Report) , HD Supply Holdings, Inc. (HDS - Free Report) and MSC Industrial Direct Company, Inc. (MSM - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Grainger has a long-term earnings growth rate of 12.5%. The company’s shares have surged 96% over the past year.

HD Supply has an estimated long-term growth rate of 15.7%. Its shares have rallied 16% in a year’s time.

MSC Industrial Direct has a projected long-term growth rate of 13.6%. Its shares have rallied 15% over the past year.

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