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Ball Corp (BLL) Q3 Earnings & Sales Miss Estimates, Rise Y/Y

Zacks Equity Research

Ball Corporation BLL reported third-quarter 2019 adjusted earnings of 70 cents per share, missing the Zacks Consensus Estimate of 73 cents. The reported figure, however, improved 25% on a year-over-year basis on strong demand trends in both aluminum beverage packaging and aerospace businesses.
 
On a reported basis, the company posted earnings of 27 cents per share compared with 17 cents in the prior-year quarter.

Total sales went up to $2,953 million in the reported quarter from $2,946 million in the year-ago quarter. The top line, however, missed the Zacks Consensus Estimate of $3,052 million. Global beverage can volumes were up 4% and aerospace contracted backlog increased 9% in the quarter.

Operational Update

Cost of sales inched up to $2,363 million from $2,362 million the year-ago quarter. Gross profit rose to $590 million from the year-ago quarter’s $584 million. Gross margin came in at 19.9% during the third quarter compared with the prior-year quarter’s 19.8%.

Selling, general and administrative expenses dropped 20.3% year over year to $90 million. Adjusted operating income increased 8.5% to $369 million from the year-ago quarter’s $340 million. The company reported operating margin of 12.5% compared with 11.5% in the comparable period last year.

Ball Corporation Price, Consensus and EPS Surprise

 

Ball Corporation Price, Consensus and EPS Surprise

Ball Corporation price-consensus-eps-surprise-chart | Ball Corporation Quote

Segment Performance

The Beverage packaging’s North and Central America segment revenues edged down to $1,230 million in the September-end quarter from $1,237 million a year ago. Operating earnings went up 2.6% year over year to $157 million.

Sales at the Beverage packaging, Europe segment came in at $699 million in the reported quarter, improving 2.3% year over year. Operating earnings grew 7.1% year over year to $90 million. Segment volume was driven by customers’ increasing preference for cans over glass packaging, strong growth for energy drinks and growing demand for specialty cans.

The Beverage packaging South America segment’s revenues climbed to $392 million during the July-September quarter from $391 million in the comparable period last year. Operating earnings moved down to $60 million from $71 million in the year-earlier quarter. Industry beverage can demand in Brazil is solid as customers are shifting from glass packaging to aluminum cans.

In the Aerospace segment, sales rose 32.2% year over year to $374 million. Operating earnings increased 34.6% year over year to $35 million. As of the end of the third quarter, the segment’s contracted backlog increased to $2.2 billion. Since then, the company has won contracts worth $4.5 billion, which have not yet been included in the backlog.

Financial Condition

Ball Corp reported cash and cash equivalents of $483 million at the end of the third quarter, down from $598 million at the end of the year-earlier quarter. Cash flow from operating activities were $656 million during the nine-month period ended Sep 30, 2019, compared with $1,027 million recorded in the prior-year comparable period. The company’s long-term debt increased to $6,623 million as of Sep 30, 2019, from $6,523 million as of Sep 30, 2018.

The company has returned more than $900 million to shareholders so far in 2019 through dividends and share repurchases.

Outlook

In 2019, the company expects to meet its long-term target for earnings per share and EVA dollar growth goal.
 
Share Price Performance

Ball Corp’s shares have appreciated around 55.3% over the past year, outperforming the industry’s growth of 50.0%.



Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the Industrial Products sector are Sharps Compliance Corp SMED, Plug Power Inc. PLUG and Cintas Corporation CTAS. While Sharps Compliance sports a Zacks Rank #1 (Strong Buy), Plug Power and Cintas carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sharps Compliance has an expected earnings growth rate of a whopping 500% for the ongoing year. The company has gained 48.4% so far this year.

Plug Power has a projected earnings growth rate of 2.8% for the current year. The stock has gained 121.8% so far this year.

Cintas has an estimated earnings growth rate of 12.74% for 2019. Shares of the company have rallied 63.4% year to date.

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