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Ball Corp Attains New 52-Week: What's Driving the Rally?

Zacks Equity Research

Shares of Ball Corporation BLL scaled a fresh 52-week high of $65.73 during trading session on Jun 6, before closing a little lower at $65.66.
The company has a market cap of $21.98 billion.

Over the last three months, its average volume of shares traded has been approximately 2.21M. The company has expected long-term earnings per share growth rate of 5.50%.

Notably, the stock has rallied 74.7% in a year’s time, higher than the S&P 500’s rally of 0.9%. Additionally, Ball Corporation has outperformed 42.6% growth recorded by the industry.

Driving Factors

Customers are now preferring cans over glass and plastic. Ball Corporation remains well poised to meet this growing demand. The company remains actively focused on expanding geographic footprint, aligning with the right customers and markets, growing with new products and capabilities, and leveraging its technical know-how.

The company reaffirmed its comparable EBITDA guidance of $2 billion and expects free cash flow of more than $1 billion in 2019, backed by continued solid demand for aluminum packaging and robust aerospace backlog. For the ongoing year, contributions from its new lines, year-over-year impact of SG&A improvement undertaken in 2018 and plant-cost initiatives will bolster earnings growth and margin expansion.

The Aerospace business is poised to witness revenue growth of more 15% this year. With contracted backlog levels of $2.1 billion at the end of the first quarter and won-not-booked backlog at $4.9 billion, the future looks bright for aerospace for the next three to five years. In 2019 and beyond, the company anticipates earnings per share to be up 10-15%.

Ball Corporation’s North American segment is likely to benefit from fixed cost savings associated with the North American optimization program, volume growth, improved aluminum can-sheet quality, and reduce start-up costs in 2019 and beyond. The South American industry trends remain strong, with cans being the favored package in the beer, tea, energy and hard alcohol categories. Further, expansions in Paraguay remain on track, while the ones in Argentina and Chile are already contributing to the segment’s growth.

The company continues to execute its strategies of achieving better value for standard products and higher growth for specialty products. Specialty cans now represent more than 43% of its mix compared with 30% in 2016. Ball Corporation’s focus on pursuing cost-out programs, completing growth capital projects and commercializing on the inherent sustainability attributes of metal packaging, will benefit it in the days ahead.

Positive Growth Projections

The Zacks Consensus Estimate for Ball Corporation’s 2019 earnings per share is currently stands at $2.61, indicating growth of 18.6% from the year-ago quarter. The same for 2020 is pegged at $2.97, suggesting an improvement of 13.8% from the year-ago reported quarter.

Zacks Rank & Stocks to Consider

Ball Corporation currently carries a Zacks Rank #3 (Hold).

Some better top-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and Harsco Corporation HSC, each sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DMC Global has an estimated earnings growth rate of 83.5% for the ongoing year. The company’s shares have surged 49.3% in the past year.

Lawson Products has an expected earnings growth rate of 24.5% for the current year. The stock has appreciated 57.4% in a year’s time.

Harsco has a projected earnings growth rate of 9.1% for 2019. The company’s shares have gained 5.4% over the past year.

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