U.S. Markets open in 3 hrs 23 mins

Ball Corporation Hits 52-Week High on Strong Fundamentals

Zacks Equity Research

Shares of Ball Corporation (BLL) reached a new 52-week high of $63.53 on Jul 9 and eventually closed trade a tad lower at $63.44. The stock price appreciation continues to be fueled by expected benefits from product launches and expansion in emerging markets.

Ball Corporation has delivered a solid one-year return of about 46.7% and year-to-date return of 23.4%, outperforming the S&P 500. Average volume of shares traded over the last three months is approximately 971K.

This Broomfield, CO-based company is the largest manufacturer of beverage cans in North America, with a market cap of $8.84 billion and long-term estimated earnings per share growth rate of 11.07%. The company has outperformed the Zacks Consensus Estimate in the past four trailing quarters, with an average surprise of 11.41%.

Strengths of Ball Corporation

On Jul 1, Ball Corporation announced that the International Metal Decorators Association has recognized two of its metal packaging designs -- Meguiar's Hot Shine Tire Coating aerosol can and Team Realtree Outdoor Energy Blaze Orange Tea two-piece can -- in the "Excellence in Quality" awards competition, which honors the best in metal decorating at its 2014 conference in Bloomingdale, IL.

Shares of Ball Corp. started gaining since May 1 after the company reported first-quarter 2014 adjusted earnings of 81 cents per share, which easily beat the Zacks Consensus Estimate of 68 cents. Moreover, the reported figure surged 40% year over year, aided by global packaging volume growth and manufacturing efficiencies. The company affirmed its free cash flow of $550 million for full-year 2014 and maintained the long-term diluted earnings per share growth goal of 10–15%.

The shares gained further support as Ball Corp., on May 19, announced its intention to expand in Southeast Asia by building a one-line beverage can manufacturing plant in Myanmar. The new plant will supply beverage containers to Coca-Cola Pinya Beverages, a joint venture between The Coca-Cola Co. (KO) and two other customers. The Myanmar plant, which is expected to come online in mid-2015, will help the company to capitalize on the growing demand for beverage containers in a relatively fast growing market.

On Jun 5, Ball Corporation announced that it has been ranked 3rd among the 500 largest U.S. companies by Newsweek. The Newsweek Green Rankings which are considered one of the world's most recognized assessments of corporate environmental impact, evaluates the U.S. companies by market capitalization and rates them based on performance on key performance indicators, including: energy productivity; greenhouse gas emissions; water and waste; reputation; sustainability pay link and board committee; and third party verification of environmental metrics.

On Jun 19, 2014, Ball announced that its Aerospace & Technologies segment has been selected by the Lawrence Livermore National Laboratory to build the optics and support structure, designated as the L1-L2 Lens Assembly, for the camera on the Large Synoptic Survey Telescope (:LSST), which will sit atop the 8,800 ft. tall Cerro Pachon mountain in Chile.

The Aerospace & Technologies segment has recently successfully completed the tests of the final phase of the Defense Advanced Research Projects Agency’s (:DARPA) Membrane Optic Imager Real-Time Exploitation (:MOIRE) telescope program. After about one year of inspection and environmental testing, the segment has delivered the WorldView-3 satellite to a launch site at Vandenberg Air Force Base, CA. The WorldView-3, which has been built for DigitalGlobe, will be launched through United Launch Alliance Atlas 5 rocket in mid-Aug 2014.

Continued product innovation along with the introduction of significantly lighter-weight aerosol and beverage cans will also drive growth for Ball Corporation. The new aerosol can is expected to be launched in the U.S. in 2015. This particular can will be 10% lighter than the cans used currently.

Ball believes that there is growth potential in many of its segments. Metal beverage packaging, Americas & Asia will benefit from the Alagoinhas plant's third production line in Brazil, which is on track. The company has also initiated cost control measures in Europe, the benefits of which are expected to be realized through 2014 and 2015.

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

Other Stocks to Consider

Some better-ranked stocks in the same sector include Crown Holdings Inc. (CCK) and Graphic Packaging Holding Co. (GPK). Both of the stocks carry a Zacks Rank #2 (Buy).

Read the Full Research Report on BLL
Read the Full Research Report on KO
Read the Full Research Report on CCK
Read the Full Research Report on GPK

Zacks Investment Research