Balanced View on Bemis - Analyst Blog

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On Apr 17, 2014, we issued an updated research report on Bemis Company, Inc. ( BMS ). This manufacturer and seller of packaging products and pressure sensitive materials is expected to benefit from acquisitions as well as strong orders and backlog.

The company broadened its presence in the Asia-Pacific with the purchase of Foshan New Changsheng in Jul 2013. In addition, Bemis recorded strong orders and backlog across all geographies. Going forward, it is optimistic that product launches will drive growth.

In Feb 2014, Bemis' board of directors approved the 31st consecutive annual increase in quarterly cash dividend to 27 cents per share, which marked a 4% rise. In addition, the company repurchased $2 million shares during 2013.

Bemis expects cash flow from operating activities to exceed $500 million in 2014. The company's capital investment strategy will support its dividend payouts and help to fund strategic acquisitions and share repurchases during the year.

Bemis announced the shutdown of one of its Pressure Sensitive Materials manufacturing facilities in Stow, OH in Mar 2014. This will improve the company's competitiveness and aid the long-term growth of its Pressure Sensitive Materials business. In April 2014, Bemis divested its Paper Packaging Division. The sale will enable the company to focus on strategic opportunities in high-barrier flexible packaging, medical and pharmaceutical packaging markets in developing economies.

Bemis reported adjusted earnings of 54 cents per share for the fourth quarter and a record $2.28 per share for full-year 2013, in line with management's guidance range. For the first quarter of 2014, management expects adjusted earnings per share in the band of 55-60 cents. For full-year 2014, earnings per share are projected to range between $2.40 and $2.55, which represents a year-over-year increase of 5%-12% from the previous year.

On the flip side, Bemis remains cautious about the weaker Brazilian currency. Additionally, increased costs related to mechanical and electrical issues that were faced during the transition of production equipment from plants closed as part of the facility consolidation remains a concern. Furthermore, Bemis' revenues and net income may be affected due to rise in commodity costs and volatile economic conditions.

At present, Bemis has a Zacks Rank #3 (Hold).

Key Picks from the Sector

Some better-ranked stocks worth considering at the moment include Berry Plastics Group, Inc. ( BERY ), Crown Holdings Inc. ( CCK ) and KapStone Paper and Packaging Corp. ( KS ). All of these have a Zacks Rank #2 (Buy).



BERRY PLASTICS (BERY): Free Stock Analysis Report

BEMIS (BMS): Free Stock Analysis Report

CROWN HLDGS INC (CCK): Free Stock Analysis Report

KAPSTONE PAPER (KS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: BERY , BMS , CCK , KS

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