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Here's Why You Should Hold on to Berry Global (BERY) Stock
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Berry Global Group, Inc.’s (BERY - Free Report) diversified business structure allows it to mitigate the weakness in one end market with strength across others. The company boasts a strong portfolio of products, the bulk of which includes consumer non-discretionary products, whose demand remains relatively stable throughout the year. Also, its investments in the latest equipment technologies, advantaged film development and design for circularity are likely to enhance its competency in the long run.
In April 2023, the company completed the construction of a second manufacturing facility and Global Healthcare Center in Sira, Bangalore. The Sira facility extends Berry Global’s research and development expertise and increases production in several major healthcare sectors. The new facility enables the company to increase the supply of patient-centered healthcare solutions in India and throughout South Asia, thereby capitalizing on the growing opportunities across the healthcare markets in the region.
Berry Global follows a balanced capital allocation strategy, wherein it utilizes its cash flow for acquisitions, paying out dividends and repurchasing shares. The company’s buyout of Pro-Western Plastics (in June 2023) boosted its container business in North America, particularly in the dairy, industrial and medical sectors. The acquired business has been integrated into its Consumer Packaging North America segment.
Regarding shareholder returns, BERY repurchased 1.4 million shares for approximately $81 million in the first six months of fiscal 2024 (ended March 2024). In the same period, it paid dividends of $70 million. The company repurchased shares worth $600 million in fiscal 2023 (ended September 2023). Also, in November 2023, Berry Global hiked its dividend by 10%.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company’s shares have gained 6.3%.
However, Berry Global has been witnessing weakness across its segments. Reduced selling prices, owing to the pass-through of lower resin prices, are affecting the Consumer Packaging International segment. Continued softness in the paper and packaging industry, due to lower consumer spending, is affecting the Consumer Packaging North America segment. Also, a lower demand environment in hygiene and specialty markets is affecting the Health, Hygiene, & Specialties segment.
BERY’s high debt level remains a concern for its profitability. Despite its efforts to reduce debt leverage, the company’s current and long-term debt remained high at $8.7 billion at the end of the second quarter of fiscal 2024.
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Packaging Corporation of America (PKG - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 12.3%, on average.
The consensus estimate for PKG’s 2024 earnings has increased 0.7% in the past 60 days. Shares of Packaging Corporation have inched up 0.3% in the past month.
Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank of 2. IR delivered a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 2.2% in the past 60 days. Its shares have risen 4.3% in the past month.
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Here's Why You Should Hold on to Berry Global (BERY) Stock
Berry Global Group, Inc.’s (BERY - Free Report) diversified business structure allows it to mitigate the weakness in one end market with strength across others. The company boasts a strong portfolio of products, the bulk of which includes consumer non-discretionary products, whose demand remains relatively stable throughout the year. Also, its investments in the latest equipment technologies, advantaged film development and design for circularity are likely to enhance its competency in the long run.
In April 2023, the company completed the construction of a second manufacturing facility and Global Healthcare Center in Sira, Bangalore. The Sira facility extends Berry Global’s research and development expertise and increases production in several major healthcare sectors. The new facility enables the company to increase the supply of patient-centered healthcare solutions in India and throughout South Asia, thereby capitalizing on the growing opportunities across the healthcare markets in the region.
Berry Global follows a balanced capital allocation strategy, wherein it utilizes its cash flow for acquisitions, paying out dividends and repurchasing shares. The company’s buyout of Pro-Western Plastics (in June 2023) boosted its container business in North America, particularly in the dairy, industrial and medical sectors. The acquired business has been integrated into its Consumer Packaging North America segment.
Regarding shareholder returns, BERY repurchased 1.4 million shares for approximately $81 million in the first six months of fiscal 2024 (ended March 2024). In the same period, it paid dividends of $70 million. The company repurchased shares worth $600 million in fiscal 2023 (ended September 2023). Also, in November 2023, Berry Global hiked its dividend by 10%.
Image Source: Zacks Investment Research
In the past three months, this Zacks Rank #3 (Hold) company’s shares have gained 6.3%.
However, Berry Global has been witnessing weakness across its segments. Reduced selling prices, owing to the pass-through of lower resin prices, are affecting the Consumer Packaging International segment. Continued softness in the paper and packaging industry, due to lower consumer spending, is affecting the Consumer Packaging North America segment. Also, a lower demand environment in hygiene and specialty markets is affecting the Health, Hygiene, & Specialties segment.
BERY’s high debt level remains a concern for its profitability. Despite its efforts to reduce debt leverage, the company’s current and long-term debt remained high at $8.7 billion at the end of the second quarter of fiscal 2024.
Stocks to Consider
Some better-ranked companies from the Zacks Industrial Products sector are discussed below:
Applied Industrial Technologies, Inc. (AIT - Free Report) presently sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter average earnings surprise of 8.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AIT’s fiscal 2024 earnings has improved 0.9% in the past 60 days. The stock has risen 4.5% in the past month.
Packaging Corporation of America (PKG - Free Report) presently carries a Zacks Rank #2 (Buy) and has a trailing four-quarter earnings surprise of 12.3%, on average.
The consensus estimate for PKG’s 2024 earnings has increased 0.7% in the past 60 days. Shares of Packaging Corporation have inched up 0.3% in the past month.
Ingersoll Rand Inc. (IR - Free Report) presently carries a Zacks Rank of 2. IR delivered a trailing four-quarter earnings surprise of 12.9%, on average.
The Zacks Consensus Estimate for Ingersoll Rand’s 2024 earnings has increased 2.2% in the past 60 days. Its shares have risen 4.3% in the past month.