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Sealed Air (SEE) Stock Rallies 28% YTD: What's Driving it?

Zacks Equity Research

Shares of Sealed Air Corporation SEE have rallied 28% year to date, driven by stellar second-quarter 2019 results, upbeat outlook for the ongoing year and the Reinvent SEE Strategy, announced in December. Meanwhile, the industry it belongs to has declined 22.1% over the same time frame.

Sealed Air, a Zacks Rank #2 (Buy) stock, has a market cap of roughly $6.9 billion. The company has expected long-term earnings per share growth rate of 8.6%.

Let’s delve deeper and analyze the reasons behind the company’s impressive price performance:

Strong Q2

Sealed Air’s second-quarter 2019 adjusted earnings per share came in at 80 cents. The figure surpassed the Zacks Consensus Estimate of 64 cents by 25% and also improved 25% year over year. The better-than-expected performance was aided by the company’s Reinvent SEE strategy, which was introduced in December 2018 to drive growth.

Upbeat 2019 Outlook

Sealed Air’s net sales guidance for fiscal at 2019 is pegged at $4.85 billion, which suggest year-over-year growth of approximately 2% on reported basis and 5% in constant dollars. Adjusted EBITDA is estimated at $950-$960 million, up from adjusted EBITDA of $890 million in fiscal 2018. Adjusted earnings per share in fiscal 2019 is expected to the range of $2.70 to $2.80. The company had reported earnings per share of $2.50 in fiscal 2018.

Healthy Growth Projections

The Zacks Consensus Estimate for Sealed Air’s current-year earnings is at $2.77, suggesting growth of 10.8% in the year-ago quarter. The same for 2020 earnings stands at $3.06, indicating an improvement of 10.6% from the year-ago reported figure.

Rising Estimates

Earnings estimate revisions have had significant impact on stock prices. The Zacks Consensus Estimate for Sealed Air’s fiscal 2019 and fiscal 2020 earnings have moved up around 1% and 2%, respectively, over the past 30 days, reflecting analysts’ confidence in the stock.

Growth Drivers in Place

The abovementioned Reinvent SEE 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 focused on new and existing high-growth markets.

The strategy will fuel Sealed Air’s growth by supporting packaging innovations for fresh food and e-commerce. The Reinvent SEE Strategy and the company’s ongoing restructuring program are likely to result in total annualized savings of $240-$260 million from 2019 through 2021.

Sealed Air’s growth will also be supported by higher demand for its core product portfolio and recently-introduced innovations. The company is witnessing increased demand for essential and high-performing packaging solutions that extend shelf life, reduce waste and drive customer productivity. Moreover, acquisitions to expand geographic presence and product offerings will help sustain growth.

Other Stocks to Consider

Some other top-ranked stocks in the Industrial Products sector are Unifirst Corporation UNF, Albany International Corporation AIN and Cintas Corporation CTAS. While Unifirst flaunts a Zacks Rank #1 (Strong Buy), Albany International and Cintas carries a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Unifirst has a projected earnings growth rate of 15.17% for the current year. The stock has gained 38% so far this year.

Albany International has an estimated earnings growth rate of 32.3% for 2019. The company’s shares have gained 31% year to date.

Cintas Corporation has an expected earnings growth rate of 11.15% for the ongoing year. The stock has appreciated 56% so far this year.

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Sealed Air Corporation (SEE) : Free Stock Analysis Report
 
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