Silgan Holdings Inc. (SLGN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We have reiterated our Neutral recommendation on Silgan Holdings with a target price of $53.00. Earnings increased 14% year over year to $0.73 per share in the first quarter of 2014. The company guided adjusted EPS to between $3.10 and $3.30 for 2014, reflecting 13% to 20% y-o-y growth. Silgan will benefit from its successful acquisition of Portola Packaging in Oct 2013. The acquisition will enhance Silgan's Closure business and also enable expansion of its plastic closures offerings in Europe. Geographic expansion will also help in long-term growth. Increasing productivity and cost reduction initiatives, such as the Can Vision 2020, will also drive growth. However, high debt-to-capitalization ratio remains a concern.

Overview:

Silgan Holdings Inc. is one of the leading North American manufacturers of metal and plastic consumer goods packaging products. Its products are used in diverse end-markets. It is the largest metal-container supplier for food products in North America. The company has 81 manufacturing plants throughout North and South America, Europe and Asia. Its product lines include steel and aluminum containers for human and pet food custom-designed plastic containers for personal care, healthcare, pharmaceutical, household, industrial chemical, food, pet care, agricultural chemical, automotive and marine chemical products and metal, composite and plastic closures for food and beverage products. Some of the world's best-known branded consumer products, including Campbell's Soup, Del Monte Fruits and Vegetables, Listerine and Friskies Pet Food, use Silgan's containers.

The Metal Food Container (MFC) (55% of total revenue in the first quarter of fiscal 2014) business is engaged in the manufacture and sale of steel and aluminum containers used primarily by processors and packagers of food products such as metal containers for soup, vegetables, fruit, meat, coffee, pet food and other miscellaneous goods. Silgan holds around 50% of the market share in the U.S. metal food container market.

The Closures business (25%) manufactures and sells metal, composite and plastic vacuum closures for food and beverage products. The segment also provides sealing/capping equipment to complement its closure product offering.

The Plastic Container business (20%) is one of the leading North American manufacturers of custom-designed high-density polyethylene (HDPE) for personal care, healthcare and household and industrial chemical products. The segment also makes polyethylene terephthalate (PET) containers for the personal care market. It produces plastic containers from a full range of resin materials and offers a wide array of molding and decorating capabilities.


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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 , Stocks

Referenced Stocks: MFC , SLGN

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