We have reiterated our Neutral recommendation on Silgan Holdings
with a target price of $57. In fourth-quarter 2014, the company's
earnings increased 45% year over year to $0.58 per share. For 2015,
Silgan initiated EPS guidance in the range of $3.20 $3.40,
reflecting annual growth of 1% to 7%. Silgan also announced the
construction of three new manufacturing facilities in 2015 that
will help optimize its operating footprint and cost structure and
share repurchases. Silgan will also benefit from the Portola
Packaging and Van Can acquisitions. 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 and foreign
exchange volatility remain concerns.
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) (67% of total revenue in the
third 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 (20%) 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 (13%) 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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