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Crown Holdings (CCK) Gains From Solid Beverage-Can Demand

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Zacks Equity Research
·3 min read
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On Dec 8, we issued an updated research report on Crown Holdings, Inc. CCK. The company will benefit from solid global beverage-can demand as customers are preferring cans over other packaging formats. The company has been focusing on investments in capacity additions, building new plants and strategic acquisitions to capitalize on this trend.

Rising Demand for Beverage Cans Bodes Well

Crown Holdings is anticipated to gain from the surging global beverage-can demand. Developing markets such as Mexico and Brazil are witnessing higher growth rates owing to the rising per capita income and the consequent increase in beverage consumption. While the economies in Europe and North America are more mature, there are still growth opportunities aided by beverages, such as energy drinks, teas, juices, sparkling water and craft beer, and an increased preference for cans over certain other forms of beverage packaging. With its many inherent benefits, including being infinitely recyclable, the beverage can continues to gain popularity among marketers and consumers globally.

Investments in Capacity to Spur Growth

Crown Holdings continues to implement several beverage-can capacity-expansion projects in a bid to meet the surging beverage-can demand. In the ongoing year, the company already has commercialized more than 2 billion units of annual capacity across the Americas Beverage businesses, and will add more than 4.5 billion units of annual production capacity in 2021.

Construction is underway at a new state-of-the-art beverage can facility in Bowling Green, KY, which will likely commence operations in second-quarter 2021. The company announced that it will add a second line to that facility that will be online in late third-quarter 2021. To meet the expanding requirements of specialty cans in the Pacific Northwest, Crown Holdings will construct a third line in the Olympia, WA plant, which is scheduled to start production in third-quarter 2021. The company will add a second line in its recently-constructed facility in Rio Verde, expected to begin operations in the third quarter next year.

Moreover, Crown Holdings is focused on disciplined pricing, cost control and capital allocation. The company’s efforts to pursue growth opportunities through capacity additions to the existing plants, building new plants in existing markets, along with acquisitions in geographic areas and product lines, will drive growth.

Price Performance

The company’s shares have gained 35.1% over the past year, compared to the industry’s growth of 42.1%.




Zacks Rank & Other Stocks to Consider

Crown Holdings currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the Industrial Products sector include iRobot Corporation IRBT, Silgan Holdings Inc. SLGN and SiteOne Landscape Supply, Inc. SITE. While iRobot flaunts a Zacks Rank #1 (Strong Buy), Silgan and SiteOne Landscape carry a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

iRobot has an estimated earnings growth rate of 18.8% for the ongoing year. Shares of the company have appreciated 75.7% in the past year.

Silgan has a projected earnings growth rate of 37.9% for the current year. Over the past year, the company’s shares have gained 14.7%.

SiteOne Landscape has an expected earnings growth rate of 28.6% for 2020. The stock has rallied 56.1% in a year’s time.

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