Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Ball Corporation (BLL) Down 2.6% Since Earnings Report: Can It Rebound?

Published 06/04/2018, 05:04 AM
Updated 07/09/2023, 06:31 AM

A month has gone by since the last earnings report for Ball Corporation (NYSE:BLL) . Shares have lost about 2.6% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is BLL due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Ball Corp Beats on Q1 Earnings & Sales, Keeps View
Ball Corporation reported first-quarter 2018 adjusted earnings of 50 cents per share, beating the Zacks Consensus Estimate of 45 cents. Earnings also jumped 32% year over year, mainly driven by improved performance in all product lines, along with lower corporate costs.
On a reported basis, the company posted earnings of 35 cents per share compared to 19 cents per share recorded in the prior-year quarter.
Total revenues increased 12.6% year over year to $2,785 million in the reported quarter. The revenue figure also surpassed the Zacks Consensus Estimate of $2,603 million. In Ball Corporation’s global beverage can business, overall volumes were up in low single-digits in the quarter, driven largely by continued strong performance in South America and Europe.
Operational Update
Cost of sales went up 13.3% year over year to $2,237 million. Gross profit improved 10% year over year to $548 million. Gross margin contracted 30 basis points (bps) to 19.7%.
Selling, general and administrative expenses dropped 21.7% year over year to $112 million. Adjusted operating income increased 22.8% to $436 million from the $355 million reported in the year-ago quarter. The company reported operating margin of 15.7%, up 130 bps year over year.
Segment Performance
The Beverage packaging’s North and Central America segment’s revenues went up 9% year over year to $1,035 million in the first quarter. Operating earnings of $113 million decreased 8% year over year.
Sales at the Beverage packaging, Europe segment came in at $609 million in the quarter, advancing 20% year over year. Operating earnings surged 27.7% year over year to $60 million.
The Beverage packaging South America segment’s revenues jumped 23.7% year over year to $459 million in the reported quarter. Operating earnings of $98 million recorded a substantial improvement from $58 million recorded in the prior-year quarter.
The Food and Aerosol Packaging segment’s sales came in at $275 million, inching up 1.1% year over year. Operating earnings rose 9.5% year over year to $23 million.
In the Aerospace and Technologies segment, sales went up 11.9% year over year to $264 million. Operating earnings increased 19% year over year to $25 million. The segment’s backlog came in at around $1.7 billion at the end of the first quarter.
Financial Condition
Ball Corporation reported cash and cash equivalents of $477 million at the end of the first quarter, up from $458 million at the end of the year-ago quarter. The company used $74 million of cash in operating activities during the quarter compared with the cash usage of $401 million recorded in the prior-year period. Ball Corporation’s long-term debt decreased to $7,131 million as of Mar 31, 2018, from $7,476 million as of Mar 31, 2017.
The company initiated a share-repurchase program during the first quarter and increased share repurchase authorization to 25 million shares, which will help return significant value to shareholders in 2018.
Outlook
Ball Corporation reaffirmed its financial goals for 2018. The company expects its free cash flow to be around $900 million and capital spending will be at least $600 million. Notably, Ball Corporation reaffirms that its comparable EBITDA will be $2 billion and free cash flow will be in excess of $1 billion in 2019. The company's recent $750 million senior notes offering also bodes well for the long term.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions higher for the current quarter compared to three lower.

VGM Scores

At this time, BLL has a subpar Growth Score of D. Its Momentum is doing a lot better with a B. However, the stock was also allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, BLL has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



Ball Corporation (BLL): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.