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Ball Corp's (BLL) Q1 Earnings Miss, Revenues Top Estimates

Zacks Equity Research

Ball Corporation BLL reported first-quarter 2019 adjusted earnings of 49 cents per share, missing the Zacks Consensus Estimate of 50 cents. The reported figure also declined 2% on a year-over-year basis.
 
On a reported basis, the company posted earnings of 34 cents per share compared with 35 cents per share recorded in the prior-year quarter.
 
Total revenues remained flat year over year to $2,785 million in the reported quarter. The top line surpassed the Zacks Consensus Estimate of $2,654 million. Higher-than-expected global can demand driven by customers' shifting mix to aluminum packaging and product launches, drove top-line growth.

Operational Update

Cost of sales inched up 0.7% year over year to $2,253 million. Gross profit declined 3% year over year to $532 million. Gross margin came in at 19.1% during the first quarter compared with the prior-year quarter’s 19.6%.
 
Selling, general and administrative expenses flared up 13.4% year over year to $127 million. Adjusted operating income decreased 8.3% to $275 million from the year-ago quarter’s reported figure of $300 million. The company reported operating margin of 9.8% compared with the prior-year’s 10.7%.

Ball Corporation Price, Consensus and EPS Surprise

Ball Corporation Price, Consensus and EPS Surprise | Ball Corporation Quote

Segment Performance
 
The Beverage packaging’s North and Central America segment revenues went up 9.2% year over year to $1,131 million in the first quarter. Operating earnings of $118 million increased 4.4% year over year.
 
Sales in the Beverage packaging, Europe segment came in at $638 million in the reported quarter, advancing 4.8% year over year. Operating earnings climbed 6.7% year over year to $64 million.
 
The Beverage packaging South America segment’s revenues declined 4% year over year to $441 million during the March-end quarter. Operating earnings declined to $68 million from $98 million recorded in the prior-year quarter.
 
In the Aerospace and Technologies segment, sales increased 24% year over year to $328 million. Operating earnings climbed 20% year over year to $30 million. The segment’s backlog came in at around $2.1 billion.

Financial Condition
 
Ball Corporation reported cash and cash equivalents of $603 million at the end of the first quarter, up from $477 million held at the end of the prior year quarter. The company used $129 million of cash in operating activities during the first quarter compared with the cash usage of $74 million recorded in the prior-year period. The company’s long-term debt decreased to $6,719 million as of Mar 31, 2019, from $7,131 million as of Mar 31, 2018.

Outlook
 
Ball Corporation maintained comparable EBITDA guidance of $2 billion and expects free cash flow of more than $1 billion in 2019. This is backed by continued solid demand for aluminum packaging and robust aerospace backlog. In 2019, the company expects to surpass its long-term target of 10-15% earnings per share growth goal.

Share Price Performance

Ball Corporation’s shares have appreciated around 54.8% over the past year, outperforming the industry’s growth of 36.7%.



Zacks Rank & Stocks to Consider
 
Ball Corporation currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and DXP Enterprises, Inc. DXPE, 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 77.3% for the ongoing year. The company’s shares have soared 80.3%, in the past year.

Lawson Products has a stellar expected earnings growth rate of 102.5% for the current year. The stock has appreciated 44.4% in a year’s time.

DXP Enterprises has a projected earnings growth rate of 21.6% for 2019. The company’s shares have gained 15.7%, over the past year.

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