On Oct 26, 2013, Zacks Investment Research downgraded
Silgan Holdings Inc.
) to a Zacks Rank #5 (Strong Sell).
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SILGAN HOLDINGS (SLGN): Free Stock Analysis
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Why the Downgrade?
Silgan witnessed sharp downward price and estimate revisions
after reporting disappointing third-quarter 2012 results on Oct
23. The company reported earnings of $1.23 per share in the
third-quarter of 2013, which improved 5.1% year over year but
were below the company's guided range of $1.25 to $1.35 per
Despite volume growth in metal container business,
weather-related headwinds and higher-than-anticipated interest
expense affected the earnings. The results also fell short of the
Zacks Consensus Estimate of $1.31. The company has delivered
negative earnings surprise in the last three quarters.
For 2013, Silgan lowered its expectation for adjusted earnings
per share to the band of $2.75 to $2.85 from $3.00 to $3.15. The
Zacks Consensus Estimate for 2013 of $2.80 reflects a
year-over-year increase of 3.67%.
Even though Silgan will benefit from its successful acquisitions,
increasing productivity and cost reduction initiatives, soft
demand in Europe, a high debt-to-capitalization ratio and lower
volume expectation remain the concerns.
Over the last 7 days, all of the 10 estimates for Silgan were
revised downward, pulling down the Zacks Consensus Estimate by 8%
to $2.80 per share. For 2014, all of 10 estimates were revised
downward over the same timeframe, lowering the Zacks Consensus
Estimate by 7% to $3.15 per share.
Other Stocks to Consider
Not all stocks in the industrial products sector are performing
as poorly as Silgan. We recommend
), with a Zacks Rank #1 (Strong Buy), while
Mobile Mini, Inc.
Packaging Corporation of America
), carrying Zacks Rank #2 (Buy), are also worth considering.