AptarGroup (ATR) Scales 52-Week High: More Room to Run?
Shares of AptarGroup ATR scaled a new 52-week high of $131.96 on Aug 29, before closing the session a tad lower at $131.82.
ATR has a market capitalization of $8.65 billion and a Zacks Rank #2 (Buy), currently.
In the past year, AptarGroup’s shares have gained 26.6% compared with the industry’s 4.2% growth. The Industrial Products sector and the S&P 500 have gained 14% and 11.2%, respectively, in the same timeframe.
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Solid Q2 Results
AptarGroup reported second-quarter 2023 adjusted earnings per share of $1.23, which increased 26% year over year from earnings of 98 cents per share in the year-ago quarter (including comparable exchange rates).
Total revenues increased 6% year over year to $896 million. Core sales, excluding currency and acquisition effects, improved 4% year over year due to strong volume growth in the pharma and beauty segments.
Momentum to Continue in Q3
AptarGroup estimates third-quarter 2023 adjusted earnings per share to be $1.23-$1.31. The midpoint of the range indicates year-over-year growth of 34%. Our model projects earnings per share to be $1.23 for the quarter, indicating 30% year-over-year growth. Revenues are projected to be $887 million, which factors in core sales growth of 5.3% and a favorable currency impact of 0.7%.
Earnings estimates for ATR have also moved up over the past 30 days. The Zacks Consensus Estimate for the ongoing quarter’s bottom line has moved up 15%. The consensus mark for 2023 has been revised upward by 7% and for 2024, by 4%. The favorable estimate revisions instill investors’ confidence in the stock.
Impressive Strategic Actions to Aid Growth
AptarGroup has been focused on business transformation plans to drive top-line growth, boost operational excellence, enhance its approach to innovation and improve organizational effectiveness.
The company has primarily been focused on transforming its Beauty segment, adding capabilities in Asia, implementing commercial strategies, reducing costs and capitalizing on fast-growing application fields. The company’s cost-control measures and pricing actions will help sustain margins in the upcoming quarters.
Solid Segment Performance Drives Margins
The Pharma segment is witnessing healthy demand for its proprietary dispensing devices used for nasal decongestants, eye care, cough and cold, and saline rinses, as well as allergic rhinitis, emergency medicines and depression therapies. Demand for elastomeric components has also been strong, including biologics.
Given the ongoing sales momentum in elastomer components and active material solutions, AptarGroup is expanding its capacity to produce elastomer components for injected medicines and active material science solutions, which will drive growth. Also, recently, the FDA approved Narcan for over-the-counter use, which is expected to boost the segment’s growth. The Pharma segment is expected to gain from the ramp-up of the distribution channel for Narcan.
The Beauty segment is seeing higher sales in prestige and mass fragrance, along with sales growth of skin care and color cosmetic solutions.
Focus on Expansion & Innovation Boosts Growth
AptarGroup has been committed to expanding its business through acquisitions to expand the scope of technologies, geographic presence and product offerings.
It is poised to gain from innovative product launches and continues to be the preferred choice for renowned brands worldwide. The Pharma segment’s proprietary nasal spray device is the delivery solution for a new migraine treatment, which has received FDA approval in the United States.
Solid Balance Sheet Bodes Well
As of Jun 30, 2023, AptarGroup had available cash and equivalents of approximately $121 million. The company’s total debt-to-capital ratio was 0.35 as of Jun 30, 2023, lower than the industry’s 0.63. The times interest earned ratio was 9.6, higher than the industry’s 5.3. The company’s strong balance sheet enables it to continue to invest in the business, pursue strategic opportunities and continue to return value to shareholders as dividends and share repurchases.
In July, it announced an increase to the quarterly dividend by around 8% to 41 cents per share. It is on track to achieve30 consecutive years of paying an increasing total annual dividend.
For 2023, the company has budgeted $300 million for capital expenditures. This includes the investment in capacity expansion for its pharma proprietary drug delivery systems to meet rapidly growing demand.
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Terex Corporation TEX, Astec Industries, Inc. ASTE and A. O. Smith Corporation AOS. TEX and ASTE sport a Zacks Rank #1 (Strong Buy) at present, and AOS has a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Terex’s 2023 earnings per share is pegged at $1.61. Estimates were unchanged in the last 60 days. It has a trailing four-quarter average earnings surprise of 27.1%. TEX has gained 67% in a year’s time.
Astec has an average trailing four-quarter earnings surprise of 20%. The Zacks Consensus Estimate for ASTE’s 2023 earnings is pegged at $2.81 per share. The consensus estimate for 2023 earnings has moved 4% north in the past 60 days. ASTE’s shares have gained 37% in the last year.
The Zacks Consensus Estimate for A. O. Smith’s 2023 earnings per share is pegged at $3.57. The consensus estimate for 2023 earnings has moved 5% north in the past 60 days. It has a trailing four-quarter average earnings surprise of 10.5%. AOS has gained 22.6% in the last year.
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