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AptarGroup (ATR) Q3 Earnings & Sales Top Estimates, Shares Up

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Zacks Equity Research
·4 min read
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AptarGroup, Inc.’s ATR shares have gained 4.7% since the company reported better-than-expected results for third-quarter 2020. The company’s adjusted earnings per share came in at $1.00, surpassing the Zacks Consensus Estimate of 84 cents. The bottom line also improved 3% year over year.

On a reported basis, earnings came in at 95 cents per share compared with the year-ago quarter’s 85 cents per share.

Total revenues increased 8.3% year over year to $759 million during the September-end quarter on positive impacts of currency translation rates and recent acquisitions. The top line also beat the Zacks Consensus Estimate of $706 million. Core sales, excluding currency and acquisition effects, went up 2% year over year. Solid underlying demand for medicines drove sale growth in the Pharma segment. The company also registered growth in the food, personal care and home care markets.

Operational Update

Cost of sales went up 7.8% year over year to $480 million. Gross profit increased 9% year over year to $280 million. Gross margin came in at 36.8% during the third quarter compared with the prior-year quarter’s 36.6%.

Selling, research, development and administrative expenses flared up 8.9% year over year to $122 million. Adjusted operating income climbed 3% year over year to $101 million. Operating margin came in at 13.3% in the reported quarter, down from the year-ago quarter’s 13.9%. Adjusted EBITDA increased 7.5% year on year to $157 million in the July-September quarter.

AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. Price, Consensus and EPS Surprise
AptarGroup, Inc. Price, Consensus and EPS Surprise

AptarGroup, Inc. price-consensus-eps-surprise-chart | AptarGroup, Inc. Quote

Segmental Performance

Total revenues in the Beauty + Homes segment grew 2.7% year over year to $337 million. Adjusted operating income in the third quarter plummeted 47.6% year over year to $11 million.

Total revenues in the Pharma segment rose 17.4% year over year to $316 million. Adjusted operating income came in at $92.7 million for the September-end quarter compared with the year-earlier quarter’s $79.7 million.

Total revenues in the Food + Beverage segment increased 2% year over year to $106 million. Operating income grew 14.5% year over year to $11 million.

Financial Performance

AptarGroup reported cash and cash equivalents of $227 million as of Sep 30, 2020, down from $242 million as of Dec 31, 2019. The company generated $381 million of cash flow from operations in the first nine months of the current year compared with the $380 million witnessed in the comparable period last year. As of Sep 30, 2020, long-term debt was approximately $1,039 million, down from $1,085 million as of Dec 31, 2019.

Outlook

AptarGroup anticipates to achieve core sales growth in the current quarter. Rising demand in most of its end markets is expected to offset pandemic-related declines in some other end markets. The company’s Pharma business will continue to perform well on increased demand due to the COVID-19 pandemic. Considering these factors, management estimates fourth-quarter adjusted earnings per share in the range of 84 cents to 92 cents.

Price Performance

Shares of the company have gained 8.8% in the past year, outperforming the industry’s growth of 4.6%.

Zacks Rank and Stocks to Consider

AptarGroup currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the Industrial Products sector are Crown Holdings, Inc. CCK, iRobot Corporation IRBT and Worthington Industries, Inc. WOR. All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Crown Holdings has a projected earnings growth rate of 11.7% for fiscal 2020. Over the past year, the company’s shares have appreciated 23.2%.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. The company’s shares have rallied 63.6% in the past year.

Worthington has an expected earnings growth rate of 19.2% for 2020. The stock has climbed 30.1% in a year’s time.

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