Ball Corp (BLL) To Grow On Business Optimization Efforts

We issued an updated research report on Ball Corporation (NYSE:BLL) on Jun 5.

The company is set to benefit from the optimization of its packaging, manufacturing, network, and beverage food and aerosol. However, elevated expenses, prolonged weakness at the end-market level for carbonated drinks, beer, and food and flat can demand remain challenges.

Notably, Ball Corporation improved its operating efficiencies from the recently deployed capital expenditure projects in the Monterrey, Mexico beverage and end facility, Canton, OH tinplate cutting and coating facility, Chestnut Hill, TN aerosol line, and the DeviZes UK and Velim, Czech Republic impact extruded aerosol expansions.

Further, Ball Corporation completed the complex IT system integration work in the North American beverage operations and started additional transformational cost-out projects. The company completed the closure of food and aerosol metal service center in Weirton, WV, as well as sold the former Hubbard, OH paint and general line container plant, in an EVA-positive transaction.

Moreover, its multi-year value capture plans are on course and the company will recognize the majority of the $150 million of anticipated 2017 synergies in the second half of this year.

However, Ball Corporation projects full-year 2017 interest expense to be nearly $280 million. The company expects year-end net debt in the range of $6.2–$6.3 billion. Corporate undistributed cost was approximately $45 million in the first quarter, higher than the fourth-quarter 2016 figure.

The company estimates corporate undistributed cost to be roughly $140 million for full-year 2017, up from the previous estimate of $115 million, due to higher IT and certain project costs and European pension expenses. These escalated expenses will affect earnings for 2017.

Ball Corporation expects overall demand to remain relatively flat in 2017. The company foresees overall flat volumes for the year, softer in the first half and comparatively stronger in the second half. Sustained weakness at the end-market level for carbonated drinks, beer and food also remain headwinds.

Ball Corporation currently carries a Zacks Rank #3 (Hold).

Share Price Performance

In the past three months, Ball Corporation has outperformed the Zacks classified Containers-Metal/Glass sub-industry with respect to price performance. The stock gained around 14%, while the industry ascended11.9% over the same time frame.

Stocks to Consider

Some better-ranked stocks in the same sector include AGCO Corporation (NYSE:AGCO) , Caterpillar, Inc. (NYSE:CAT) and Parker-Hannifin Corporation (NYSE:PH) . All the three 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% for the trailing four quarters. Caterpillar generated an average positive earnings surprise of 40.25% over the past four quarters. Parker-Hannifin has an average positive earnings surprise of 14.94% for the last four quarters.

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