AptarGroup (ATR) Down 0.1% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for AptarGroup (ATR). Shares have lost about 0.1% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AptarGroup due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

AptarGroup's Q1 Earnings & Revenues Trump, Up Y/Y

AptarGroup delivered first-quarter 2019 adjusted earnings per share of $1.07, beating the Zacks Consensus Estimate of 98 cents by a margin of 9.2%. Further, the bottom line grew 16% year over year and came in higher than management’s guided range between 95 cents and $1.00.
 
On a reported basis, the company recorded earnings of 96 cents per share compared with the year-ago quarter’s reported figure of 92 cents.

AptarGroup achieved year-over-year solid core sales growth across all segments during the reported quarter. Also, benefits from business transformation, business mix and lower resin cost aided its profit margin during the quarter.
 
Operational Update
 
Total revenues improved 6% year over year to $744.5 million in the reported quarter. Core sales growth was at 7%, acquisitions contributed 6%, while unfavorable exchange rates impacted sales by 7%. Further, the top line beat the Zacks Consensus Estimate of $734 million.

Cost of sales rose 3% to $469 million from $456 million recorded in the year-ago quarter. Gross profit increased 10.8% year over year to $275 million. Gross margin came in at 36.9% during the first quarter, up from the prior-year quarter’s 35.2%.

Selling, research, development and administrative expenses rose 8% year over year to $121 million. Adjusted operating income went up 22% year over year to $99.5 million. The company reported operating margin of 13.4% compared with the prior-year’s 11.6%. Adjusted EBITDA increased 15% year over year to $154 million in the first quarter.

Segmental Performance
 
Total revenues in the Beauty + Homes segment declined 2.7% year over year to $367.6 million. Operating income in the March-end quarter was up 2.2% year over year to $32.4 million.
 
Total revenues in the Pharma segment increased 18.5% year over year to $272.7 million. Operating income climbed 19% year over year to $81.6 million in the first quarter.
 
Total revenues in the Food + Beverage segment climbed 9.4% year over year to $104 million. Operating income jumped 32.2% year over year to $8.2 million.

Financial Performance
 
AptarGroup reported cash and cash equivalents of $217 million at the end of the first quarter, down from $262 million as of Dec 31, 2018. At the quarter’s end, long-term debt was approximately $1,141 million, up from $1,125 million as of Dec 31, 2018.

AptarGroup's board has authorized share repurchase of $350 million and hiked its quarterly cash dividend by 6% to 36 cents per share. The dividend is payable on May 22, to shareholders of record as of May 1, 2019.

Outlook
 
AptarGroup projects adjusted earnings per share for second-quarter 2019 at $1.09-$1.15. The guidance reflects year-over-year growth of 7% at the mid-point. It also reflects a higher tax rate of 29% to 31%. Moreover, the company expects impressive product sales growth across all segments in the current quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, AptarGroup has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

AptarGroup has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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