Bemis Company, Inc. BMS continues to benefit from focus on Agility plan, business expansion and lower tax rates. Further, the company’s long-term earnings growth rate of 7.3% makes us confident of its inherent strength.
Let’s delve deeper and find out what’s fueling this stock.
Bemis’ initiatives to improve cost structure through the Agility plan will help fix, strengthen, and grow its business. The plan includes optimizing manufacturing capacity, consolidating office space, and reducing SG&A, as well as other costs. It also involves the simplification of product portfolio and organizational structure, rebalancing R&D efforts, along with pursuing targeted areas of growth in the North American business. Bemis expects to realize roughly $35 million of savings from the plan.
Bemis remains focused on improving its operating performance and expansion of business. During 2018, Bemis hired new sales representatives who are encouraged to pursue and win new business targets. The company established core specific offerings by leveraging its existing innovative product portfolio and completed customer account reviews to focus on sales efforts.
Bemis recorded income tax rate of 23% for third-quarter 2018, lower than 32.2% in the prior-year quarter. The lower rates were primarily led by the U.S. tax reform. Bemis expects that the effective tax rate for 2018 will be approximately 23%.
Bemis’ earnings per share outlook isat $2.75-$2.85 for full-year 2018. The mid-point of earnings guidance range reflects a year-over-year rise of 17%. The Zacks Consensus Estimate for 2018 is pegged at $2.79, reflecting year-over-year growth of around 17%.
Other factors that make Bemis a favorable investment option include:
Solid Zacks Rank, Score Combination
Bemis carries a Zacks Rank #2 (Buy), at present. It has a VGM score of B. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. In fact, our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1(Strong Buy) or 2, make solid investment choices.
Bemis' shares have outperformed its industry with respect to price performance over the past six months. The stock has gained around 9%, while the industry has recorded loss of 12%.
Return on Assets (ROA)
Bemis currently has a ROA of 6.7%, while the industry's ROA is 5.9%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.
Other Stocks to Consider
Some other top-ranked stocks in the sector include Brady Corporation BRC, Northwest Pipe Company NWPX and Alarm.com Holdings, Inc. ALRM. All three stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Brady has a long-term earnings growth rate of 7.5%. The company’s shares have gained around 11% over the past six months.
Northwest Pipe has a long-term earnings growth rate of 10%. Its shares have gained18%, over the past six months.
Alarm.com has a long-term earnings growth rate of 17%. The stock has rallied 26% over the past six months.
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