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Berry Global Stock Boasts Strong Prospects Despite Headwinds
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Berry Global Group, Inc. (BERY - Free Report) is poised to gain from strength in its Consumer Packaging North America segment supported by an increase in consumer discretionary spending in the United States. Higher discretionary spending over the past three months (April, May and June) is reflected in the growth in demand for the segment’s products. It has been witnessing strength in its food, beverage, personal care, home care and industrial end markets, which led to 4% year-over-year growth in its revenues in the third quarter of fiscal 2024 (ended June 2024).
Berry Global’s investments in the latest equipment technologies, advantaged film development and design for circularity are likely to enhance its competency in the long run. Also, it boasts a strong portfolio of products, the bulk of which includes consumer non-discretionary products like bottles & vials, containers, tubs, & pots and filtration materials.
In April 2023, the company completed the construction of a second manufacturing facility and Global Healthcare Center in Sira, Bangalore. The Sira facility extended Berry Global’s research and development expertise and increases production in several major healthcare sectors. The facility enabled the company to increase the supply of patient-centered healthcare solutions (like ophthalmic, nasal pumps and injectable administrations) 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. It utilizes its cash flow for acquiring businesses, paying out dividends and repurchasing shares. The company acquired Pro-Western Plastics in June 2023. The buyout boosted its container business in North America, particularly in the dairy, industrial and medical sectors. The acquired business is operated within the Consumer Packaging North America segment.
Berry Global repurchased 2 million shares for approximately $117 million in the first nine months of fiscal 2024. In the same period, it paid dividends of $104 million. In November 2023, it hiked its dividend by 10% to 27.5 cents per share (annually: $1.10).
In the past year, this Zacks Rank #3 (Hold) company’s shares gained 13.2% compared with the industry’s 5.4% growth.
Image Source: Zacks Investment Research
However, Berry Global has been witnessing weakness across most of its segments. Weakness in the food service market and reduced selling prices, owing to the pass-through of lower resin prices, are affecting the Consumer Packaging International segment. The Flexibles segment is experiencing weakness due to softness in North American transportation and shrink film markets. Reduced selling prices, owing to pass-through of lower resin prices, are also affecting the Health, Hygiene, & Specialties segment.
The company has a significant presence in the international markets. As a result, its financial performance is subject to various risks like the foreign currency exchange rate, interest rate fluctuations and hyperinflation in some foreign countries. The increased value of the U.S. dollar relative to the local currencies of the foreign markets is likely to affect the top line in the quarters ahead.
PKG delivered a trailing four-quarter average earnings surprise of 8.6%. In the past 60 days, the Zacks Consensus Estimate for Packaging Corporation’s 2024 earnings has increased 4.7%.
AptarGroup, Inc. (ATR - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 7.2%.
In the past 60 days, the Zacks Consensus Estimate for ATR’s 2024 earnings has remained steady.
Ferguson Enterprises Inc. (FERG - Free Report) currently carries a Zacks Rank of 2. FERG delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Ferguson’s fiscal 2025 earnings has remained steady.
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Berry Global Stock Boasts Strong Prospects Despite Headwinds
Berry Global Group, Inc. (BERY - Free Report) is poised to gain from strength in its Consumer Packaging North America segment supported by an increase in consumer discretionary spending in the United States. Higher discretionary spending over the past three months (April, May and June) is reflected in the growth in demand for the segment’s products. It has been witnessing strength in its food, beverage, personal care, home care and industrial end markets, which led to 4% year-over-year growth in its revenues in the third quarter of fiscal 2024 (ended June 2024).
Berry Global’s investments in the latest equipment technologies, advantaged film development and design for circularity are likely to enhance its competency in the long run. Also, it boasts a strong portfolio of products, the bulk of which includes consumer non-discretionary products like bottles & vials, containers, tubs, & pots and filtration materials.
In April 2023, the company completed the construction of a second manufacturing facility and Global Healthcare Center in Sira, Bangalore. The Sira facility extended Berry Global’s research and development expertise and increases production in several major healthcare sectors. The facility enabled the company to increase the supply of patient-centered healthcare solutions (like ophthalmic, nasal pumps and injectable administrations) 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. It utilizes its cash flow for acquiring businesses, paying out dividends and repurchasing shares. The company acquired Pro-Western Plastics in June 2023. The buyout boosted its container business in North America, particularly in the dairy, industrial and medical sectors. The acquired business is operated within the Consumer Packaging North America segment.
Berry Global repurchased 2 million shares for approximately $117 million in the first nine months of fiscal 2024. In the same period, it paid dividends of $104 million. In November 2023, it hiked its dividend by 10% to 27.5 cents per share (annually: $1.10).
In the past year, this Zacks Rank #3 (Hold) company’s shares gained 13.2% compared with the industry’s 5.4% growth.
Image Source: Zacks Investment Research
However, Berry Global has been witnessing weakness across most of its segments. Weakness in the food service market and reduced selling prices, owing to the pass-through of lower resin prices, are affecting the Consumer Packaging International segment. The Flexibles segment is experiencing weakness due to softness in North American transportation and shrink film markets. Reduced selling prices, owing to pass-through of lower resin prices, are also affecting the Health, Hygiene, & Specialties segment.
The company has a significant presence in the international markets. As a result, its financial performance is subject to various risks like the foreign currency exchange rate, interest rate fluctuations and hyperinflation in some foreign countries. The increased value of the U.S. dollar relative to the local currencies of the foreign markets is likely to affect the top line in the quarters ahead.
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Some better-ranked companies are discussed below.
Packaging Corporation of America (PKG - Free Report) currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PKG delivered a trailing four-quarter average earnings surprise of 8.6%. In the past 60 days, the Zacks Consensus Estimate for Packaging Corporation’s 2024 earnings has increased 4.7%.
AptarGroup, Inc. (ATR - Free Report) presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter average earnings surprise of 7.2%.
In the past 60 days, the Zacks Consensus Estimate for ATR’s 2024 earnings has remained steady.
Ferguson Enterprises Inc. (FERG - Free Report) currently carries a Zacks Rank of 2. FERG delivered a trailing four-quarter average earnings surprise of 2.6%.
In the past 60 days, the consensus estimate for Ferguson’s fiscal 2025 earnings has remained steady.