Silgan Holdings Inc.
) has upped its dividend by 16.7% to 14 cents. The increased
dividend will be paid on Mar 29, 2013, to stockholders of record
as on Mar 12, 2013.
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The company has hiked its dividend exactly after a year. In Feb
last year, Silgan raised its dividend by 9% to 12 cents per
share. Silgan has hiked its dividend consistently every year
In 2012, the company paid a dividend of $33.8 million. The
current dividend yield is 1.10% and the dividend hike will
increase the yield to 1.30%. The dividend yield of its peers,
) stands at 1.20% and 3.30%, respectively. On the other hand,
Crown Holdings Inc.
Mobile Mini, Inc.
) do not pay dividends.
This dividend hikes comes on the heels of an impressive fiscal
2012 performance. Silgan reported record adjusted EPS of $2.70 in
fiscal 2012, up 3% from $2.63 in fiscal 2011 and a penny ahead of
the Zacks Consensus Estimate. The reported earnings were within
management guidance of $2.65 to $2.75. Revenues stood at $3.59
billion, up 2.3% from $3.5 billion in 2011. This increase was
driven by higher sales in the metal container and plastic
container businesses, partially offset by a decline in sales in
the closures business.
As of 2012 end, Silgan had cash and cash equivalents of $466
million compared with $397 million as of 2011 end. Cash flow from
operating activities was $351.7 million during 2012 compared with
an inflow of $359.6 million in 2011. Free cash flow almost
doubled to $303.7 million in 2012 from $152.9 million in 2011.
Free cash flow per share was a record $4.35 in 2012 compared with
$2.17 in 2011.
Looking ahead into 2013, the company expects adjusted earnings
per share in the range of $3.05 to $3.20 on the back of improved
profitability in each business, full-year benefit from the 2012
acquisitions and share repurchase. Adjusted earnings are expected
to be in the range of 40 cents-50 cents per share for the first
quarter of 2013.
Silgan has managed to increase its overall share in the U.S.
metal food container market to approximately 50% on the back of
accretive acquisitions and organic growth. Silgan Holdings
continues to enhance profitability through productivity and cost
reduction opportunities. Backed by the additional capacity
resulting from the acquisitions, the company has been able to
rationalize plant operations and reduce overhead costs by closing
plants and work force downsizing.
However, Silgan's exposure to Europe has increased after its
Vogel & Noot acquisition and expansion of the Closures
segment in the region, accounting for almost 50% of the segment's
revenues. In Europe, weakening demand and softer pricing has
emerged as a result of the ongoing economic instability in the
region. With the European conditions expected to remain
challenging over the next few quarters, we expect additional
Furthermore, Silgan Holdings high debt-to-capitalization ratio is
a concern. Its strategy to leverage for acquisitions will further
aggravate the company's debt position. Silgan retains a
short-term Zacks Rank #3 (Hold).
Silgan is a leading manufacturer of consumer goods packaging
products operating 81 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.