On Aug 22, 2014, we issued an updated research report on
Sealed Air Corporation
). The packaging service provider will benefit from price hikes and
acquisitions. However, decline in slaughter rate is a concern for
the Food Care segment.
In Jul 2014, Sealed Air acquired the assets of Virox Technologies.
Notably, Sealed Air is already connected to Virox through its
Diversey Care business. The buyout will help the Diversey
Care segment acquire a leading position in the U.S. and Canada,
when it comes to offering infection prevention resources to
healthcare professionals. As prospects of the global health care
sector are positive for next few years, the acquisition bodes well
for Sealed Air's growth in the healthcare market.
Sealed Air announced a 5% price hike on certain products of its
Product Care unit in North America on Aug 18. The price increase
effective Oct 2014, will help to counter the persistent rise of raw
material and other input costs. The company's efforts of minimizing
the impact of cost increases will help customers in the long term
and help it in delivering an innovative product portfolio.
Further, as part of its 'Change the Game' strategy and in line with
the intention of transforming into a knowledge-based company,
Sealed Air has relocated its global headquarters to a new,
state-of-the-art campus in Charlotte, NC. This move will create a
stronger, one-company culture that will enable greater
collaboration, accelerate innovation and drive operating
However, the decline in slaughter rate remains a concern for Sealed
Air's Food Care segment. The slaughter rate has witnessed a
downtrend since the third week of June. The company anticipates
that beef production will continue to fall in the second half of
the year. Hog slaughters are also expected to be lower in the
Specifically, U.S. beef and pork production volumes remain under
pressure by high single-digit declines that are rippling through
the supply chain which may cause modest volume declines in food
packaging this year and in turn affect the segment.
Additionally, growth in the Product Care segment was partly offset
by a sales decline owing to rationalization and the lackluster
economic environment in Europe in the second quarter 2014. Volumes
in the segment will continue to be hurt by the ongoing product
Moreover, economic uncertainty, unfavorable foreign currency
translation and volatility in raw material price will continue to
affect Sealed Air's results in 2014.
Currently, Sealed Air sports a Zacks Rank #1 (Strong Buy).
Other Stocks that Warrant a Look
Other stocks to consider in the same industry include Graphic
Packaging Holding Company (
), ACCO Brands Corporation (
) and AO Smith Corp. (
). All these stocks carry a Zacks Rank #2 (Buy).
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SEALED AIR CORP (SEE): Free Stock Analysis
SMITH (AO) CORP (AOS): Free Stock Analysis
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