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Bemis (BMS) Shares Up 37% in a Year: What's Driving the Stock?

Zacks Equity Research

Shares of Bemis Company, Inc. BMS have fared well in a year’s time, on solid earnings growth prospects, focus on Agility plan, as well as improving operating performance and business expansion. The stock has rallied 37.3% over the past year, outperforming the industry’s loss of 1.6%.



Bemis, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $5.14 billion. The company has an expected long-term earnings per share growth rate of 7.33%.

The company outpaced the Zacks Consensus Estimate in two of the trailing four quarters, the average positive earnings surprise being roughly 2.5%.

The Zacks Consensus Estimate for Bemis’s 2019 earnings is currently pegged at $3.01, reflecting year-over-year growth of 7.9%. The same for 2020 is pinned at $3.21, calling for a year-over-year improvement of 6.5%.

Let’s delve deeper and analyze the reasons behind the company’s impressive price performance and find out if there is room for further appreciation:

What’s Driving Bemis?

Bemis’ initiatives to improve the company’s its cost structure through the Agility plan will help fix, strengthen and grow its business. This plan includes optimizing manufacturing capacity, consolidating office space, and reducing SG&A, as well as other costs.

As part of this three-pronged approach, the “fix” aspect involves restructuring and a cost-saving plan target of $65 million pre-tax by the end of 2019. The “strengthen and grow” aspects of Agility include simplifying product portfolio and organizational structure, rebalancing R&D efforts to focus on manufacturing improvements, and deliberately pursuing targeted areas of growth in the North American business. These actions will lay the foundation for the company’s growth in the upcoming period.

Bemis expects Agility to be a key driver this year. In the U.S. business, it expects the Agility plan to help expand margins. Performance of the Rest of World business will be aided by the global the health care packaging business.

Bemis remains focused on improving its operating performance and expansion of business. Last August, Amcor and Bemis announced to merge their operations in a $6.8-billion all-stock transaction. This merger will create a global leader in consumer packaging. The combined entity will have a worldwide presence, with a broader product portfolio, increased product differentiation, as well as enhanced operating capabilities. Bemis’ shareholders will benefit from the projected increase in dividend, which has nearly doubled from the current dividend rate. The merger will provide $180 million of cost synergies identified as part of the transaction. The company remains on track to close the deal in the ongoing quarter.

Bemis also remains committed to maintain a strong balance sheet and returning free cash flow to shareholders. On Feb 7, the company announced an increase of 3.2% in the quarterly cash dividend to 32 cents per share. This marks the 36th consecutive year that the company has increased its dividend payment. Bemis has been paying an annual dividend on its stock since 1922, and has been included in Standard & Poor's list of Dividend Aristocrats since 2008.

Bemis Company, Inc. Price and Consensus

Bemis Company, Inc. Price and Consensus

Bemis Company, Inc. price-consensus-chart | Bemis Company, Inc. Quote

Stocks to Consider

A few better-ranked stocks in the Industrial Products sector are DMC Global Inc. BOOM, Lawson Products, Inc. LAWS and Harsco Corporation HSC, 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 83.5% for the ongoing year. The company’s shares have surged 54.6%, in the past year.

Lawson Products has an expected earnings growth rate of 24.5% for the current year. The stock has appreciated 59.4% in a year’s time.

Harsco has a projected earnings growth rate of 9.1% for 2019. The company’s shares have gained 5.4%, over the past year.

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