Shares of Crown Holdings Inc. CCK have outperformed the industry in a month's time. The stock has gained 18% compared with the industry 's growth of 11%.
Let's delve deep and analyze the reasons behind the company's impressive price performance and find out if there is room for further appreciation:
Better-than-Expected Q3 Results: Crown Holdings reported impressive third-quarter 2018 numbers. Earnings came in at $1.71, increasing 17% year over year and comfortably outpacing the Zacks Consensus Estimate of $1.65. It also surpassed management's guided range of $1.60-$1.70.
Net sales in the reported quarter rose 29% year over year to $3,174 million, surpassing the Zacks Consensus Estimate of $3,158 million. This year-over-year improvement in sales can be attributed to positive impact of the Signode acquisition, improved beverage can volumes and pass through of higher material costs to customers. Notably, global beverage can volumes grew 3% year over year in the third quarter.
Solid Q4 Ahead Despite Headwinds: Crown Holdings projects fourth-quarter 2018 earnings per share between 97 cents and $1.20. This reflects year-over-year growth of around 37% at the mid-point. The company will benefit from strong global beverage can demand as customers and consumers are favoring cans over other formats. This will help mitigate the impact of damages caused by recent hurricanes Florence and Michael on the quarter's results, elevated freight costs in North America and negative impact of foreign currency-translation.
Healthy Growth Projections: The Zacks Consensus Estimate for the fourth quarter is pegged at $1.00, depicting year-over-year growth of 27%. For fiscal 2018, the Zacks Consensus Estimate for earnings per share is at $5.20, projecting year-over-year growth of 29% while the same for 2019 anticipates a rise of 9% to $5.67.
Positive Earnings Surprise History: Crown Holdings surpassed the Zacks Consensus Estimate in three of the last four quarters with the average beat being 4.81%, reflecting its operational efficiencies.
Crown Holdings, Inc. Price
Crown Holdings, Inc. price | Crown Holdings, Inc. Quote Growth Drivers Ahead:
Crown Holdings remains focused on disciplined pricing, cost control and capital allocation. It also continues to pursue growth opportunities through capacity additions to existing plants, new plants in existing markets, strategic acquisitions in geographic areas and product lines. In sync with this, Crown Holdings acquired Signode Industrial Group Holdings (Bermuda) Ltd. in 2018, which is expected to be accretive to earnings in 2018. Further, its previous buyout of EMPAQUE, a leading manufacturer for the beverage industry in Mexico, significantly fortified the company's presence in growing Mexican market.
With its many inherent benefits, including being infinitely recyclable, the beverage can continues to gain popularity among marketers and consumers globally. Emerging markets such as Southeast Asia and Mexico have experienced higher growth rates due to rising per capita income and increase in beverage consumption. Though the economies in Europe and North America are more mature, opportunities for growth are still present. This is aided by beverages, such as energy drinks, teas, juices, sparkling water and craft beer, and an increased preference for cans over certain other forms of beverage packaging. Going forward, Crown Holdings intends to build new facilities to cater to the rising demand.
Crown Holdings has a long term estimated earnings growth rate of 7%.
Cheaper than the industry: Crown Holdings has a trailing 12-month EV/EBITDA ratio of 8.5, while the industry's average trailing 12-month EV/EBITDA is 9.7.
Favorable Rank, Score Combination: This Zacks Rank #3 (Hold) stock carries a favorable VGM Score of A. This helps to identify stocks with the most attractive value, best growth rate and solid momentum.
Further, the company has a return on equity - a profitability measure - of 59.6%, better than the industry average of 23.7%. This reflects the company's efficiency in utilizing its shareholders' funds.
Stocks to Consider
Some better-ranked stocks in the same sector are Enersys ENS , CECO Environmental Corp. CECE and Rexnord Corporation RXN . While Enersys flaunts a Zacks Rank #1 (Strong Buy), CECO and Rexnord carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Enersys has a long-term earnings growth rate of 10%. Its shares have gained 15% over the past month.
CECO has a long-term earnings growth rate of 15%. The company's shares have gone up 15%, in the past month.
Rexnord has a long-term earnings growth rate of 16.4%. The stock has gained 14% over the past month.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Crown Holdings, Inc. (CCK): Free Stock Analysis Report Rexnord Corporation (RXN): Free Stock Analysis Report CECO Environmental Corp. (CECE): Free Stock Analysis Report Enersys (ENS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research