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Here's Why Silgan Holdings (SLGN) Be in Your Portfolio Now

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Shares of Silgan Holdings, Inc. (SLGN - Free Report) , one of the leading North American manufacturers of metal and plastic consumer goods packaging products, have been performing well of late.

The stock has yielded a solid one-year return of around 20.6%. If you haven’t taken advantage of the share price appreciation yet, the time is ripe for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.

The Zacks Rank #1 (Strong Buy) stock has an estimated long-term earnings growth rate of 10%.

Ahead of the Industry



In the last one year, Silgan Holdings has outperformed the Zacks classified Containers- Metal/Glass sub-industry with respect to price performance. The stock gained around 28.2%, while the industry dipped 10%.

We note that the industry is also favorably placed as it occupies a space in the top 28% of the Zacks classified industries (71 out of the 256).

Estimates Northbound

Estimates for Silgan Holdings have moved up in the past 30 days, reflecting the optimistic outlook of analysts. The earnings estimate for fiscal 2017 and fiscal 2018 have gone up in the past 30 days.

The estimate for fiscal 2017 has gone up 4% to $3.34, reflecting a year-over-year growth of 20.40%. The Zacks Consensus Estimate for earnings for fiscal 2018 has also moved north 8% to $3.79, a year-over-year growth of 13.54%.

Positive Earnings Surprise History

Silgan Holdings has outpaced the Zacks Consensus Estimate in three of the four trailing four quarters, delivering a positive average earnings surprise of 5.63%.

Upbeat Q1

Silgan Holdings reported first-quarter 2017 adjusted earnings of 62 cents, up around 38% year over year. Earnings surpassed the Zacks Consensus Estimate as well as management’s guidance range of 48–58 cents. Total revenue increased 1.6% year over year to $805.4 million, beating the Zacks Consensus Estimate of $794 million. This growth was primarily driven by an increase in net sales in the metal container business.

Hiked Guidance

Silgan raised estimate of adjusted earnings per share guidance for full-year 2017, which excludes transaction related costs attributed to announced acquisitions, rationalization charges and loss from early extinguishment of debt, to the range of $3.20–$3.40 from the previous range of $3.15–$3.35. Further, the company forecasts significant improvement in footprint optimization programs. These improvements will be largely in the first half of the year which will drive the second-quarter performance. The mid-point of the raised guidance reflects a year-over-year growth of 19%.

For the second quarter, the company anticipates earnings per share in the range of 65–75 cents. Compared with the year-ago quarter’s earnings per share of 60 cents, the mid-point of the guidance depicts a year-over-year growth of 17%.

Growth Drivers

Silgan is the largest manufacturer of metal containers for food products in North America. The company continues to enhance profitability through strategic acquisitions and footprint expansion. The latest acquisition of the Dispensing Systems business of WestRock Company   is expected to deliver earnings of 15 cents for the remaining nine months of 2017, net of an estimated purchase accounting charge of 15 cents per share for the write-up of inventory in second-quarter 2017. Moreover, the acquisition will help boost the scope and breadth of Silgan’s market leading closure business. The company will be able to offer highly engineered dispensing systems for food, beverage, health care, garden, home and beauty products to customers.

Moreover, the company has undertaken several footprint optimization programs across all its businesses, targeted to improve efficiencies, reduce costs, and strengthen competitive position in each of the markets. This will aid boost growth in the long term.

Other Stocks to Consider

Other top ranked stocks worth considering in the same sector are AGCO Corporation (AGCO - Free Report) and Caterpillar, Inc. (CAT - Free Report) . Both the stocks  flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AGCO has an average positive earnings surprise of 40.39% in the trailing four quarters. Caterpillar generated an average positive earnings surprise of 40.25% in the past four quarters.

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