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Here's Why You Should Bet on Sealed Air (SEE) Stock Now

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·5 min read
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Sealed Air Corporation SEE is progressing well with its reformation plan — Reinvent SEE Strategy, which will continue to drive the bottom line. The company’s results will also be supported by enhanced demand for packaging for essential goods and e-commerce amid stay-at-home restrictions due to the coronavirus pandemic. Continued focus on acquisitions and innovation in products will also aid growth.

At present, Sealed Air carries a Zacks Rank #2 (Buy). It has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. You can see the complete list of today's Zacks #1 Rank stocks here.
 
Let’s delve deeper into the factors that substantiate the company’s Zacks Rank #2.

Strong Q3 Results & Upbeat Outlook: Sealed Air’s adjusted earnings per share (EPS) in the third quarter was 82 cents, up 28% year over year. It hiked EPS guidance to $3.05 for 2020 from prior guidance of $2.85 to $2.95. The new guidance projects year-over-year growth of 8%.

Positive Earnings Surprise History: Sealed Air has a trailing four-quarter earnings surprise of 23.1%, on average.

Positive Estimate Revisions: Over the past 60 days, the Zacks Consensus Estimate for the company’s earnings has moved upward by 6% to $3.09 for 2020 and 5% to $3.25 for 2021.

Solid Growth Expectations: The Zacks Consensus Estimate for earnings for 2020 suggests year-over-year improvement of 9.6%. The estimate for 2021 indicates year-over-year growth of 5.3%. The company has a long-term expected earnings per share growth rate of 7.9%.

Price Performance: In the past year, the stock has gained 15.1%, compared with the industry’s growth of 13.7%.



Return on Assets: Sealed Air currently has a Return on Assets (ROA) of 8.3%, while the industry’s ROA is at 5.1%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.

Reinvent SEE Strategy to Yield Savings: In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — and a fresh restructuring program in a bid to drive growth. The strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. One of most vital aspects of this strategy involves investment in technology and resources, and focusing on new and existing high-growth markets.

In 2020, the company is on track to realize $120 million of incremental benefits to adjusted EBITDA compared with last year. Over 2019-2021, the company has targeted approximately $340 million of benefits.

Strong Demand Amid the Pandemic: Around 64% of Sealed Air’s revenues come from packaging of protein, foods, fluids and goods for the medical and life sciences industries. The food care business continues to benefit from shift in demand for case ready, shrink bags and pre-packaged meals and snacks designed for home consumption amid the pandemic-induced restrictions. Also, demand for protected packaging solutions for medical supplies, pharmaceuticals, and personal protective equipment bodes well for the company’s medical and life sciences portfolio. E-commerce sales has also surged amid the pandemic.

Acquisitions are Key to Growth: The company has been active on the buyouts front, and focusing on growing core business. The acquisition of Automated Packaging Systems strengthened Sealed Air’s automated solutions and sustainable packaging offerings. The company had previously acquired AFP, Inc., which expanded its protective packaging solutions in the electronics, transportation and industrial markets with custom-engineered applications.

The company had also acquired Fagerdala, to leverage its manufacturing footprint in Asia, expertise in foam manufacturing and fabrication, and commercial organization to grow sales in the consumer electronics, medical equipment and devices, automotive, temperature assurance, and e-commerce fulfillment sectors.

Other Stocks to Consider

Some 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, Silgan and SiteOne Landscape carry a Zacks Rank of 2, at present.

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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Silgan Holdings Inc. (SLGN) : Free Stock Analysis Report
 
Sealed Air Corporation (SEE) : Free Stock Analysis Report
 
iRobot Corporation (IRBT) : Free Stock Analysis Report
 
SiteOne Landscape Supply, Inc. (SITE) : Free Stock Analysis Report
 
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