On Sept 19, we upgraded our recommendation on
Sealed Air Corporation
) from Neutral to Outperform. This was based on strong
second-quarter 2013 results, expected benefits from its
restructuring programs, Diversey acquisition and price hikes.
Sealed Air's second-quarter adjusted net earnings more than
doubled to 35 cents a share from prior-year quarter, helped by
strong growth in Asia, Middle East, Africa and Turkey (AMAT) and
Latin America, and modest growth in North America, margin
expansion in the Food & Beverage and Institutional &
Laundry divisions, benefits from pricing initiatives, and focus
on manufacturing and operational improvements.
Sealed Air managed to improve overall volumes by 2.4% year over
year driven by volume increases in all its segments barring
Medical Applications and New Ventures (Other Category). The
company plans to further hike prices in the second half of 2013
to counter material cost increases and the lag that the company
experienced in pricing in the first half.
Sealed Air's Integration & Optimization Program will generate
cost savings and benefits of approximately $195 million to $200
million by the end of 2014. The company is expected to realize an
additional $90 million of benefits in 2013. The company announced
an additional restructuring plan with projected annualized
savings of $80 million by 2015.
The Diversey acquisition in 2011 is the second largest in the
company's history, just behind the $4.8 billion purchase of the
Cryovac food-packaging business in 1998 from W.R. Grace & Co.
With this acquisition, Sealed Air expanded its presence beyond
specialty packaging solutions, offering the most comprehensive
portfolio of solutions and industry expertise in food safety and
security, facility hygiene and product protection. This
combination is expected to further enhance Sealed Air's earnings
per share and free cash flow generation.
Other Stocks to Consider
Other stocks with favorable Zacks Rank in the same industry are
PH Glatfelter Co.
), with a Zacks Rank #1 (Strong Buy), and
Sonoco Products Co.
), both carrying Zacks Rank #2 (Buy).
GLATFELTER (GLT): Free Stock Analysis Report
ROCK-TENN CO (RKT): Free Stock Analysis
SEALED AIR CORP (SEE): Free Stock Analysis
SONOCO PRODUCTS (SON): Free Stock Analysis
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