Sealed Air Corporation (SEE - Free Report) is progressing well on its reformation plan, Reinvent SEE Strategy, and restructuring program. We believe the company’s results will be supported by enhanced demand for core product portfolio, recently-introduced innovations, strong fresh food markets and e-commerce sector.
At present, Sealed Air carries a Zacks Rank #3 (Hold). It has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3, offer the best investment opportunities for investors.
Let's delve deeper into the factors that make Sealed Air stock a compelling investment option at the moment.
An Outperformer: Shares of Sealed Air have gained 9.7% over the past year, against the industry’s decline of 16.4%.
Strong Q3 Results: The company reported third-quarter 2019 adjusted earnings per share of 64 cents, which improved 5% year over year. The results can be attributed to strong execution of the company’s Reinvent SEE strategy, which was introduced in December 2018 to drive earnings growth. Total revenues were $1,219 million in the third quarter, improving from the year-ago quarter’s $1,186 million.
Upbeat 2019 Guidance: Sealed Air anticipates net sales of $4.8 billion for fiscal 2019. The guidance reflects year-over-year growth of approximately 1.5% on reported basis and 4.5% in constant dollars. Acquisitions are expected to contribute $190 million or 4% of growth to revenues. The company’s sales came in at $4.73 billion in fiscal 2018. The company projects adjusted earnings per share at $2.70-$2.80. The mid-point of the guided range indicates year-over-year growth of 10%.
Growth Projections: The Zacks Consensus Estimate for fiscal 2019 earnings is pegged at $2.78, indicating year-over-year improvement of 11.2%. For fiscal 2020, the consensus estimate for earnings per share stands at $3.00, suggesting year-over-year growth of 7.8%.
The company has an earnings growth rate of 9.9% over the past five years, ahead of the industry’s 8.9%. The momentum is likely to continue as evident from the company’s estimated long-term earnings growth rate of 10%.
Positive Earnings Surprise History: Sealed Air has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in the trailing four quarters by 10.5%, on average.
Return on Assets (ROA): Sealed Air currently has a ROA of 8.3%, while the industry's ROA is 4.7%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Reinvent SEE Strategy to Drive Earnings: In December 2018, Sealed Air announced a reformation plan, Reinvent SEE Strategy, and a fresh restructuring program, in a move to drive growth and earnings. 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.
The new strategy will fuel Sealed Air’s growth by supporting packaging innovations for fresh food and e-commerce, and increasing operating leverage target above 40% per year. The Reinvent SEE Strategy and the company’s ongoing restructuring program are likely to result in total annualized savings of more than $250 million through 2021.
Other Growth Drivers: Expected benefits from reducing costs, driving operational excellence and commercializing new innovations and favorable global business trends position the company well for improved results. Sealed Air’s top line will be supported by enhanced demand for its core product portfolio, recently-introduced innovations, strong fresh food markets and e-commerce sector.
The company is witnessing increased demand for essential and high-performing packaging solutions that extend shelf life, reduce waste and drive customer productivity. Further, ongoing momentum in high-growth geographies such as Brazil, Russia, China and Southeast Asia will continue as demand increases for packaged proteins and convenience meals.
Stocks to Consider
Some better-ranked stocks in the Industrial Products sector are CIRCOR International, Inc. (CIR - Free Report) , Hickok Inc. (CRAWA - Free Report) and Northwest Pipe Company (NWPX - Free Report) . All of these stocks sport a Zacks Rank #1, at present. You can see the complete list of today's Zacks #1 Rank stocks here.
CIRCOR International has an expected earnings growth rate of 59.3% for fiscal 2020. The stock has appreciated 101% over the past year.
Hickok has a projected earnings growth rate of 12.2% for fiscal 2020. In a year’s time, the company’s shares have rallied 91%.
Northwest Pipe has an estimated earnings growth rate of 23.1% for fiscal 2020. Over the past year, the company’s shares have gained 43%.
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