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Ball Corp (BLL) Scales New 52-Week: What's Driving the Stock?

Zacks Equity Research

Shares of Ball Corporation BLL scaled a fresh 52-week high of $64.64 during trading session on May 10, before retracing a bit to close at $64.31.

The company has a market cap of $21.5 billion. Over the last three months, its average volume of shares traded has been approximately 2.12M. The company has an expected long-term earnings per share growth rate of 5.50%.

Notably, the stock has rallied 67.7% in a year’s time, higher than the S&P 500’s gain of around 4.8%. Additionally, Ball Corporation has outperformed 44.2% growth recorded by the industry during the same time frame.

Driving Factors

In the first quarter of 2019, overall global beverage can demand climbed more than 8% — levels not seen in a long time. 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 anticipates capital spending to be $600 million in the current year.

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 boost earnings growth and margin expansion. In 2019 and beyond, the company anticipates earnings per share to be up 10-15%.

Ball Corporation’s North American segment will likely 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’s aerospace business delivered stellar revenues and operating earnings in the first quarter, aided by solid contract performance. 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 brighter for aerospace for the next three to five years. Further, the company is initiating additional products to expand its aerospace infrastructure and testing capabilities.

Ball Corporation 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. The company focuses on pursuing cost-out programs, completing growth capital projects and commercializing on the inherent sustainability attributes of metal packaging, which will benefit it in the days ahead.

Positive Growth Projections

The Zacks Consensus Estimate for Ball Corporation’s 2019 earnings per share is currently pegged at $2.61, indicating year-over-year growth of 18.6%. The same for 2020 is pinned at $2.97, calling for a year-over-year rise of 13.7%.

Ball Corporation Price and Consensus

Ball Corporation Price and Consensus

Ball Corporation price-consensus-chart | Ball Corporation Quote

Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and Roper Technologies, Inc. ROP, 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 79.7% for the ongoing year. The company’s shares have soared 69.4%, in the past year.

Lawson Products has an expected earnings growth rate of 24.5% for the current year. The stock has appreciated 42.1% in a year’s time.

Roper Technologies has a projected earnings growth rate of 7.9% for 2019. The company’s shares have gained 27.9%, over the past year.

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