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Berry Global (BERY) Stock Up 17.6% YTD: What's Driving the Rally?
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Berry Global Group, Inc.’s (BERY - Free Report) performance has been impressive since the beginning of this year, which is evident from a 17.6% increase in its share price. Strength across end market, solid product offerings, buyouts and strong capital-allocation strategies supported positive market sentiments for the company.
The Evansville, IN-based company, with $8.9 billion of market capitalization, belongs to the Zacks Containers - Paper and Packaging industry. The company currently carries a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
Year to date, Berry Global has outperformed its industry’s growth of 7.9% and the S&P 500’s rally of 14.7%.
Factors Favoring the Stock
Berry Global’s diversified business structure has been allowing it to mitigate the adverse impacts of weakness in one end market with strength across others. The company is likely to benefit from strength across the grocery and consumer-centric end markets along with improvement in industrial and automotive end markets. Also, its strong portfolio of products, bulk of which includes consumer non-discretionary products, bodes well. For fiscal 2021 (ending September 2021), the company anticipates overall organic sales growth of 5%, higher than 4% anticipated earlier.
The company utilizes its cash flow for improving organic growth capabilities, acquisitions, repaying debts as well as repurchasing shares. In first-half fiscal 2021, the company repaid long-term debt of $2,683 million. A healthy cash flow profile supports its capital-allocation strategies. For fiscal 2021, Berry Global anticipates cash flow from operations of $1,575-$1,675 million and free cash flow of $875-$975 million.
Berry Global is focused on strengthening its businesses through the addition of assets. The company’s acquired business of RPC Group (July 2019) is enhancing its growth opportunities in the plastic and recycled packaging industry. In fiscal 2020 (ended September 2020), buyouts contributed 28.6% to the company’s net sales.
In addition, the company’s focus on improving operational productivity and partnerships across the value chain is likely to improve margins and its financial performance in the quarters ahead. Notably, in second-quarter fiscal 2021 (ended Apr 3, 2021), its adjusted operating margin climbed 20 basis points to 11.4% on a year-over-year basis.
The Zacks Consensus Estimate for Berry Global’s earnings is pegged at $5.80 for fiscal 2021, up 2.1% from the 30-day-ago figure. The consensus estimate for fiscal 2022 (September 2022) earnings stands at $6.25, having moved 0.3% north over the same time frame.
Barnes delivered an earnings surprise of 19.45%, on average, in the trailing four quarters.
Franklin Electric delivered an earnings surprise of 25.39%, on average, in the trailing four quarters.
SPX FLOW delivered an earnings surprise of 82.58%, on average, in the trailing four quarters.
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Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
Berry Global (BERY) Stock Up 17.6% YTD: What's Driving the Rally?
Berry Global Group, Inc.’s (BERY - Free Report) performance has been impressive since the beginning of this year, which is evident from a 17.6% increase in its share price. Strength across end market, solid product offerings, buyouts and strong capital-allocation strategies supported positive market sentiments for the company.
The Evansville, IN-based company, with $8.9 billion of market capitalization, belongs to the Zacks Containers - Paper and Packaging industry. The company currently carries a Zacks Rank #2 (Buy).
Year to date, Berry Global has outperformed its industry’s growth of 7.9% and the S&P 500’s rally of 14.7%.
Factors Favoring the Stock
Berry Global’s diversified business structure has been allowing it to mitigate the adverse impacts of weakness in one end market with strength across others. The company is likely to benefit from strength across the grocery and consumer-centric end markets along with improvement in industrial and automotive end markets. Also, its strong portfolio of products, bulk of which includes consumer non-discretionary products, bodes well. For fiscal 2021 (ending September 2021), the company anticipates overall organic sales growth of 5%, higher than 4% anticipated earlier.
The company utilizes its cash flow for improving organic growth capabilities, acquisitions, repaying debts as well as repurchasing shares. In first-half fiscal 2021, the company repaid long-term debt of $2,683 million. A healthy cash flow profile supports its capital-allocation strategies. For fiscal 2021, Berry Global anticipates cash flow from operations of $1,575-$1,675 million and free cash flow of $875-$975 million.
Berry Global is focused on strengthening its businesses through the addition of assets. The company’s acquired business of RPC Group (July 2019) is enhancing its growth opportunities in the plastic and recycled packaging industry. In fiscal 2020 (ended September 2020), buyouts contributed 28.6% to the company’s net sales.
In addition, the company’s focus on improving operational productivity and partnerships across the value chain is likely to improve margins and its financial performance in the quarters ahead. Notably, in second-quarter fiscal 2021 (ended Apr 3, 2021), its adjusted operating margin climbed 20 basis points to 11.4% on a year-over-year basis.
The Zacks Consensus Estimate for Berry Global’s earnings is pegged at $5.80 for fiscal 2021, up 2.1% from the 30-day-ago figure. The consensus estimate for fiscal 2022 (September 2022) earnings stands at $6.25, having moved 0.3% north over the same time frame.
Other Stocks to Consider
Some other top-ranked stocks from the Zacks Industrial Products sector are Barnes Group, Inc. (B - Free Report) , Franklin Electric Co., Inc. (FELE - Free Report) and SPX FLOW, Inc. (FLOW - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Barnes delivered an earnings surprise of 19.45%, on average, in the trailing four quarters.
Franklin Electric delivered an earnings surprise of 25.39%, on average, in the trailing four quarters.
SPX FLOW delivered an earnings surprise of 82.58%, on average, in the trailing four quarters.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>