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Ball Corp (BLL) to Post Q1 Earnings: What's in the Offing?

Zacks Equity Research

Ball Corporation BLL is scheduled to report first-quarter 2019 results on May 2, before the opening bell.

In the last reported quarter, Ball Corporation reported adjusted earnings of 55 cents per share. Total revenues were up 2% year over year to $2,803 million in the quarter. While earnings missed the Zacks Consensus Estimate, revenues beat the same. The company surpassed the Zacks Consensus Estimate in one of the trailing four quarters, generating an average positive surprise of 0.66%.
Let’s see how things are shaping up for this announcement.

Factors at Play

Ball Corporation focuses on pursuing cost-out programs, completing growth capital projects and commercializing on the inherent sustainability attributes of metal packaging. These efforts will benefit the company in the to-be-reported quarter. Further, it is initiating additional products to expand its aerospace infrastructure and testing capabilities.

Ball Corporation is focused on developing innovative aluminum packaging products and expanding its business on strong cash flow and EVA returns. The company expects to benefit from outstanding requests for bids and proposals, and contract wins. It has approximately $5.3 billion as contracts already won, but not yet booked into the current backlog which will drive growth.

The Zacks Consensus Estimate for net sales for Beverage packaging, South America segment is pegged at $426 million, reflecting a decline of around 7.2% year over year. The segment’s operating income indicates a decline of 20.4% year over year to $78 million. The South American industry trends remain impressive, with cans being the favored package in the beer, tea, energy and hard alcohol categories.
The Zacks Consensus Estimate for sales in the Beverage packaging, Europe segment is pegged at $596 million for the first quarter, reflecting year-over-year decline of 2.1%. Segment operating income is projected at $62 million, indicating an improvement of 3.3% year over year. Ball Corporation’s European business will benefit from the addition of two new line facilities in Switzerland and Serbia, along with several other specialty line conversions, scheduled to be online early this year.
The Zacks Consensus Estimate for the Aerospace segment's revenues is pinned at $301 million in the to-be-reported quarter, reflecting year-over-year increase of about 14%. The segment’s operating income is projected at $31 million, reflecting year-over-year growth of 24%. The company expects aerospace business will witness operating earnings improvement in the first quarter due to new contracts.
The Beverage packaging North and Central America segment will likely report sales of $1,089 million, up 5.2% year over year. Segment operating income is projected at $129 million, indicating year-over-year improvement of 14%. The company’s North American segment is anticipated to benefit from fixed cost savings and reduce start-up costs in 2019 and beyond. The segment is experiencing some short-term supply dislocation from certain metal suppliers which will likely be managed through during the first quarter.
Nonetheless, headwinds related to currency, higher freight rates and tight metal supply in the United States will likely affect Ball Corporation’s performance. Moreover, the company's performance will be marred by volatile volumes in the EMEA beverage can business due to governmental regulation. Additionally, Saudi Arabia continues to be a challenge for Ball Corporation.

The Zacks Consensus Estimates for Ball Corporation’s earnings per share is pegged at 50 cents for the March-end quarter, flat year over year. The Zacks Consensus Estimate for total sales of $2.65 billion for the quarter indicates a decline of 4.7% from the prior-year quarter. 

Ball Corporation Price and EPS Surprise

Ball Corporation Price and EPS Surprise | Ball Corporation Quote

Earnings Whispers
Our proven model does not conclusively show that Ball Corporation is likely to beat on earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here as you will see below:  
Earnings ESP: Earnings ESP for Ball Corporation is 0.00%. The Zacks Consensus Estimate for the first-quarter earnings is pegged at 50 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Ball Corporation currently carries a Zacks Rank of 4 (Sell).     

It should be noted that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Price Performance

Ball Corporation’s shares have gained 49% over the past year, outperforming the industry’s growth of 30%.

Stocks to Consider

Here are a few companies that you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:

TPI Composites, Inc. TPIC has an Earnings ESP of +203.03% and holds a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Colfax Corporation CFX has an Earnings ESP of +2.27% and carries a Zacks Rank #3.
Regal Beloit Corporation RBC has an Earnings ESP of +2.13% and carries a Zacks Rank #3.

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