On Apr 12, we maintained our Neutral recommendation on
), manufacturer of metal and plastic packaging for beverages and
foods, based on expected benefits from growth in its specialty
beverage container business, introduction of new products,
expansion in emerging markets and strong backlog in its aerospace
and technologies segment, offset by concerns regarding loss of a
customer, weak economic condition in Europe and pricing pressure
Ball Corporation's fourth-quarter 2012 adjusted earnings of 64
cents per share fell short of the Zacks Consensus Estimate of 66
cents but increased 33% from the year-ago adjusted earnings of 48
cents. Total revenue improved 3% year over year to $2.114
billion, ahead of the Zacks Consensus Estimate of $2.107 billion.
Ball continues to expand its specialty beverage container
business, which accounts for more than 15% of its global beverage
packaging sales. Strong customer demand for Ball's popular
Alumi-Tek bottle, the introductions of the new "Royal Pint" 568mL
can and further launch of different sized Sleek can formats in
North America, and the debut of its premium, "Protected Quality"
seal wine can in Europe helped drive double-digit growth in
specialty packaging in 2012.
Ball will continue to benefit from expansion in developing
regions such as Brazil. The Brazilian can market grew
approximately 10% in 2012, and demand is expected to continue to
increase. In the region, Ball announced that its joint venture
metal beverage can plant in Alagoinhas, which began production
earlier in 2012, will start a second beverage can production line
in the second half of 2013.
In December, Ball acquired Envases del Plata S.A. de C.V., a
leading producer of extruded aluminum aerosol packaging in
Mexico. Ball is the largest supplier of extruded aluminum slugs
in the world, and this acquisition provides a new end market for
its products. Demand for extruded aluminum packaging for personal
care products continues to increase, thus providing new
opportunities for Ball's growing business.
Ball Corporation's aerospace and technologies segment ended 2012
with record sales and profits, driven by exceptional program
performance. Despite continued uncertainty around the U.S.
federal budget, Ball Aerospace ended the year with a strong
backlog of more than $1 billion.
On the flipside, late in the second quarter of 2012, Ball was
notified by a customer its intent to source beverage cans from an
alternative supplier, effective Jan 1, 2013. The volume loss,
continued macro weakness in Europe and pricing pressure in China
given excess capacity in the region remain headwinds.
Other Stocks to Consider
Ball Corporation retains a short-term Zacks Rank #3 (Hold).
Packaging Corp. of America
) with a Zacks Rank #1 (Strong Buy) and
Berry Plastics Group, Inc.
Graphic Packaging Holding Company
) with a Zacks Rank #2 (Buy) are more favorable options for
investors keen on the packaging and containers industry.
BERRY PLASTICS (BERY): Free Stock Analysis
BALL CORP (BLL): Free Stock Analysis Report
GRAPHIC PKG HLD (GPK): Free Stock Analysis
PACKAGING CORP (PKG): Free Stock Analysis
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