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AptarGroup (ATR) Stock Rallies 20% Year to Date: Here's Why

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Shares of AptarGroup, Inc.ATR have gained 20% so far this year against the industry 's decline of 6%. Its strong quarterly results, business-transformation plan to drive profitable sales growth, focus on operational excellence, and improving organizational effectiveness has contributed to the upside.

Reasons Behind the Impressive Price Performance

AptarGroup delivered second-quarter 2018 earnings per share of $1.09, beating the Zacks Consensus Estimate of $1.01. Further, earnings grew 4% year over year and came in above management's guided range of 99 cents to $1.04 per share.

AptarGroup projects earnings per share for the third quarter at 90-95 cents, excluding any restructuring expenses and effects associated with the CSP Technologies acquisition. The guidance reflects year-over-year growth of 11% at the mid-point. AptarGroup anticipates core sales to grow in each segment in the third quarter. The Zacks Consensus Estimate for the third quarter is 93 cents, reflecting year-over-year growth of 12%.

The company remains on track with its business transformation plan that is intended to drive profitable sales growth, increase operational excellence, enhance its approach to innovation and improve organizational effectiveness. The company expects the business-transformation plan to yield incremental EBITDA of approximately $80 million by the end of 2020, principally within the Beauty + Home segment.

AptarGroup also anticipates capital investments related to the transformation plan of about $45 million, the majority of which will occur in 2018. The company also remains committed to expansion of its business through inorganic growth. In sync with this, the company has made a binding offer to acquire CSP Technologies, a leader in active packaging technology based on proprietary material science expertise, for an enterprise value of $555 million. The buyout will aid AptarGroup boost its existing business in the Pharma and Food Safety markets given that CSP Technologies' current business is roughly 75% in the pharma market and 25% in the food safety market. AptarGroup is also well poised to gain from product launches. All these factors will continue to fuel the stock.

Estimate Revisions & Style Score

Upward estimate revisions reflect optimism in a stock's prospects. AptarGroup scores impressively on this front as well. Over the last 60 days, the Zacks Consensus Estimate for current-year earnings and next moved north by 2%, reflecting positive sentiment surrounding this Zacks Rank#3 (Hold) stock.

Additionally, the stock has an attractive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.

Such a score allows investors to eliminate the negative aspects of stocks and select winners. However, it is important to keep in mind that each Style Score will carry a different weight while arriving at a VGM Score.

Stocks to Consider

A few better-ranked stocks in the same sector include W.W. Grainger, Inc. GWW , iRobot Corporation IRBT and Lawson Products, Inc. LAWS . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Grainger has a long-term earnings growth rate of 12.5%. The stock has appreciated 134% in a year's time.

iRobot has a long-term earnings growth rate of 19.5%. Its shares have been up 18% in the past year.

Lawson Products has a long-term earnings growth rate of 17.5%. The company's shares have rallied 38% over the past year.

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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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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