Silgan Hikes Dividend - Analyst Blog


Silgan Holdings Inc. ( SLGN ) has recently upped its dividend by 9.1% to 12 cents. The increased dividend will be payable on March 26, 2012, to stockholders of record as on March 12, 2012.

The company has hiked its dividend nearly after a year. On February 17, 2012, Silgan raised its dividend by 5% to 11 cents per share. Silgan has hiked its dividend religiously every year since 2004.

Earlier on December 15, 2011, Silgan paid cash dividends to shareholders as of December 1, 2011. The payment aggregated to $7.7 million.

As of December 31, 2011, Silgan's cash and cash equivalents increased to $397.1 million from $175.2 million as of December 31, 2010. Cash flow from operations was $70.0 million in the fourth quarter of fiscal 2011, sharply up by 81% from the prior year quarter.

The fourth quarter 2011 results of the company were impressive. Silgan reported fourth quarter adjusted earnings of 56 cents, up from the year ago quarter of 45 cents and also beat the Zacks consensus Estimate of 54 cents.

The company's total revenue was recorded at $835.9 million, which increased 17.5% year over year from $711.6 million. Total revenue outperformed the Zacks Consensus Estimate of $813 million.

In 2012, management expects adjusted earnings per share in the band of $2.80-$2.90. The Zacks Consensus Estimate is at $2.88, nearer the high end of the guidance. In the first quarter 2012, Silgan expects adjusted earnings per share to be around 41 cents, while the Zacks Consensus Estimate is pegged at 46 cents.

Silgan Holdings is the largest manufacturer of metal containers for food products in North America. Through both acquisitions and organic growth, Silgan has increased its overall share in the U.S. metal food container market to the current market share of approximately 50%.

However, the company faces the problem of high inflation in its raw materials like steel, plastic resins, aluminium and others, and is, at the same time, unable to adjust selling prices according to fluctuations in raw material prices.  

Silgan's historical growth has been driven by acquisitions. Its inability to identify suitable targets at attractive valuations could hamper its growth rate. Moreover, the debt-to-capitalization ratio which increased to 68% as of December 31, 2011 from 62% as of December 31, 2010, also remains a concern.

We retain our Neutral rating for the stock. The quantitative Zacks #3 Rank (short-term "Hold" recommendation) for the company indicates no directional pressure on the stock over the near term.

Silgan is a leading manufacturer of consumer goods packaging products operating 66 manufacturing facilities in North and South America, Europe and Asia. In North America, Silgan is the largest supplier of metal containers for food products and a leading supplier of plastic containers for personal care products.

The company also leads in providing metals worldwide, along with composite and plastic vacuum closures for food and beverage products. Silgan competes with  Ball Corporation  ( BLL ) and  Crown Holdings Inc.  ( CCK ).

BALL CORP ( BLL ): Free Stock Analysis Report
CROWN HLDGS INC ( CCK ): Free Stock Analysis Report

SILGAN HOLDINGS ( SLGN ): 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: BLL , CCK , SLGN

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