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Ball Corp (BALL) Remains Troubled by Low Volume and High Costs
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Ball Corp (BALL - Free Report) is lately bearing the brunt of muted customer spending due to the current inflationary scenario. Higher costs and supply-chain issues are also impacting its margins. However, volumes are likely to pick up eventually due to the growing preference of customers for cans over plastic.
Shares of the Zacks Rank #4 (Sell) company have lost 44.1% in the past year compared with the industry’s decline of 36.8%.
Image Source: Zacks Investment Research
Ball Corp has lately been witnessing weaker-than-expected demand as customer spending has been muted amid higher retail prices, particularly in the United States. In this scenario, the company recently announced the closure of its aluminum beverage can manufacturing facilities in Phoenix, AZ, and St. Paul, MN. The Phoenix facility ceased production in 2022, which will likely impact the results of the Beverage Packaging, North and Central America segment. In 2023, the segment is anticipated to witness a revenue decline on weaker volumes.
The company is exposed to headwinds like the impacts of higher inflation, energy costs and supply-chain disruptions across the region. Moreover, high debt levels and the consequent higher interest expenses are woes for Ball Corp. The company’s long-term debt was $7.5 billion at the end of Dec 31, 2022. Despite BALL’s efforts to lower debt levels, the total debt to total capital ratio was high at 0.72 as of Dec 31, 2022, which is concerning.
However, the beverage can industry is expected to gain as customers now prefer cans over plastic due to increasing awareness about environmental problems. Changing lifestyle choices, population growth, and increasing disposable income have led to this shift. This bodes well with the company. It envisions global volume growth of 4% for the foreseeable future and has been investing in capacity to meet this demand. By 2025, the global beverage can industry is projected to grow by 100 billion units. Of this, the company sees an opportunity to add as many as 45 billion units.
The Beverage Packaging, EMEA segment will gain from the packaging mix shift to sustainable aluminum cans, supported by the ongoing packaging legislation in certain countries. Ball Corp’s new greenfield plants in the U.K. and Czech Republic, which are anticipated to become operational in 2023, are estimated to produce billions of cans a year across a range of formats and sizes. In the Beverage Packaging, South America segment, growth capital projects in Chile and Argentina are on track to support the rising customer demand for sustainable aluminum packaging.
Furthermore, Ball Corp continues to execute its strategies of achieving better value for standard products and higher growth for specialty products. The company is focused on pursuing cost control, completing growth capital projects, and commercializing the inherent sustainability attributes of metal packaging, which will benefit it in the foreseeable future.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 70.2% in the last year.
Alamo has an average trailing four-quarter earnings surprise of 6%. The Zacks Consensus Estimate for ALG’s 2023 earnings is pegged at $9.79 per share. This indicates a 13.6% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 7.5% in the past 60 days. Its shares gained 20.6% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 4% upward in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 9% in the last year.
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Ball Corp (BALL) Remains Troubled by Low Volume and High Costs
Ball Corp (BALL - Free Report) is lately bearing the brunt of muted customer spending due to the current inflationary scenario. Higher costs and supply-chain issues are also impacting its margins. However, volumes are likely to pick up eventually due to the growing preference of customers for cans over plastic.
Shares of the Zacks Rank #4 (Sell) company have lost 44.1% in the past year compared with the industry’s decline of 36.8%.
Image Source: Zacks Investment Research
Ball Corp has lately been witnessing weaker-than-expected demand as customer spending has been muted amid higher retail prices, particularly in the United States. In this scenario, the company recently announced the closure of its aluminum beverage can manufacturing facilities in Phoenix, AZ, and St. Paul, MN. The Phoenix facility ceased production in 2022, which will likely impact the results of the Beverage Packaging, North and Central America segment. In 2023, the segment is anticipated to witness a revenue decline on weaker volumes.
The company is exposed to headwinds like the impacts of higher inflation, energy costs and supply-chain disruptions across the region. Moreover, high debt levels and the consequent higher interest expenses are woes for Ball Corp. The company’s long-term debt was $7.5 billion at the end of Dec 31, 2022. Despite BALL’s efforts to lower debt levels, the total debt to total capital ratio was high at 0.72 as of Dec 31, 2022, which is concerning.
However, the beverage can industry is expected to gain as customers now prefer cans over plastic due to increasing awareness about environmental problems. Changing lifestyle choices, population growth, and increasing disposable income have led to this shift. This bodes well with the company. It envisions global volume growth of 4% for the foreseeable future and has been investing in capacity to meet this demand. By 2025, the global beverage can industry is projected to grow by 100 billion units. Of this, the company sees an opportunity to add as many as 45 billion units.
The Beverage Packaging, EMEA segment will gain from the packaging mix shift to sustainable aluminum cans, supported by the ongoing packaging legislation in certain countries. Ball Corp’s new greenfield plants in the U.K. and Czech Republic, which are anticipated to become operational in 2023, are estimated to produce billions of cans a year across a range of formats and sizes. In the Beverage Packaging, South America segment, growth capital projects in Chile and Argentina are on track to support the rising customer demand for sustainable aluminum packaging.
Furthermore, Ball Corp continues to execute its strategies of achieving better value for standard products and higher growth for specialty products. The company is focused on pursuing cost control, completing growth capital projects, and commercializing the inherent sustainability attributes of metal packaging, which will benefit it in the foreseeable future.
Stocks To Consider
Some better-ranked stocks from the Industrial Products sector are OI Glass (OI - Free Report) , Alamo Group (ALG - Free Report) , and Illinois Tool Works (ITW - Free Report) . OI and ALG flaunt a Zacks Rank #1 (Strong Buy) at present, and ITW has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
OI Glass has an average trailing four-quarter earnings surprise of 16.4%. The Zacks Consensus Estimate for OI’s 2023 earnings is pegged at $2.57 per share. This indicates an 11.7% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved 16% north in the past 60 days. OI’s shares gained 70.2% in the last year.
Alamo has an average trailing four-quarter earnings surprise of 6%. The Zacks Consensus Estimate for ALG’s 2023 earnings is pegged at $9.79 per share. This indicates a 13.6% increase from the prior-year reported figure. The consensus estimate for 2023 earnings has moved north by 7.5% in the past 60 days. Its shares gained 20.6% in the last year.
The Zacks Consensus Estimate for Illinois Tool Works’ fiscal 2023 earnings per share is pegged at $9.61, suggesting an increase of 4.8% from that reported in the last year. The consensus estimate for fiscal 2023 earnings moved 4% upward in the last 60 days. ITW has a trailing four-quarter average earnings surprise of 0.9%. Its shares gained 9% in the last year.