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Here's Why You Should Hold Onto Sealed Air (SEE) Stock Now

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·5 min read
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Sealed Air Corporation SEE is gaining from continued solid demand for packaging of essential products, such as food, medical supplies and consumer staples amid the coronavirus pandemic. The company is also witnessing increase in e-commerce activity during this global health crisis as customers are staying indoors. Apart from this, benefits from its Reinvent SEE Strategy and focus on acquisitions are stoking growth.

The company currently carries a Zacks Rank #3 (Hold) and has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, combined with a Zacks Rank #1 (Strong Buy) 2 (Buy) or 3, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company has a trailing four-quarter average earnings surprise of 21.41%.

Solid Growth Expectations & Positive Estimate Revisions: The Zacks Consensus Estimate for the company’s current-year earnings is currently pegged at $3.51, suggesting year-over-year growth of 10.03%. Over the past 60 days, the same has been revised upward by 4.2%. The company has a long-term projected earnings per share growth rate of 8.3%.

Price Performance: The stock has gained 29.1% year to date, outperforming the industry’s growth of 12.2%.

Zacks Investment Research
Zacks Investment Research

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Growth Drivers in Place

The company’s more than 75% of the revenues generates from end-markets that are deemed essential and are witnessing elevated demand amid pandemic-induced stay-at-home restrictions. Out of this, 63% of revenues comes in from packaging of protein, foods, fluids and goods for the medical and life-sciences industries, while around 14% of the company’s sales generates from e-commerce sales. These are likely to fuel Sealed Air’s top line in the near term.

The food care business continues to benefit from the shift in demand for case ready, shrink bags, and pre-packaged meals and snacks designed for home consumption. Sealed Air anticipates food services to recover on the reopening of restaurants and other public venues.

Also, demand for temperature assurance packaging solution is high as it ensures safe and secure distribution of COVID-19 vaccines. The company is seeing elevated demand for automated equipment and sustainable packaging solutions that maximize food safety, protect goods, reduce waste

Sealed Air projects net sales in the range of $5.25 billion to $5.35 billion for 2021. This indicates an improvement of 7-9% as reported and 6-8% in constant dollars from the prior year.

Notably, Sealed Air is also gaining from its reformation plan — Reinvent SEE Strategy. The new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. One of the most vital aspects of this strategy involves investment in technology and resources focusing on new and existing high-growth markets.

In the ongoing year, the company is on track to realize benefits of around $65 million from Reinvent SEE. During the 2018-2021 time frame, the company estimates approximately $355 million of Reinvent SEE benefits, $105 million higher than originally projected. This will continue to drive bottom-line performance in the near term.

In addition, the company has been active on the buyout 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.

Bottom Line

Investors might want to hold on to the stock, at present, as it has ample positive prospects of outperforming peers in the near future.

Stocks to Consider

A few better-ranked stocks in the industrial products sector are Tennant Company TNC, Encore Wire Corp. WIRE and Arconic Corp. ARNC. All of these stocks sport a Zacks Rank #1 at present.

Tennant has an anticipated earnings growth rate of 49.5% for the current year. The company’s shares have gained around 18%, year to date.

Encore Wire has an estimated earnings growth rate of 49.5% for the ongoing year. Year to date, the company’s shares have rallied nearly 36%.

Arconic has a projected earnings growth rate of 447% for the current year. The stock has appreciated around 21%, so far this year.

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Sealed Air Corporation (SEE) : Free Stock Analysis Report

Encore Wire Corporation (WIRE) : Free Stock Analysis Report

Tennant Company (TNC) : Free Stock Analysis Report

Arconic Corporation (ARNC) : Free Stock Analysis Report

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