On Wednesday, Crown Holdings (NYSE:CCK) experienced a shift in its stock rating and price target. Truist Securities revised its stance on the company's shares, downgrading them from Buy to Hold and reducing the price target to $88 from the previous $100. The adjustment comes as the firm takes a cautious view of Crown Holdings' future performance, particularly in terms of earnings and EBITDA improvements.
The securities firm outlined that Crown Holdings has transformed into a "show-me" story, indicating that the market may adopt a wait-and-see approach until the company demonstrates significant progress. The analyst highlighted the need for Crown Holdings to enhance its EBITDA and earnings and to address challenges within some of its ancillary, non-core businesses.
For the year 2024, Truist Securities anticipates that Crown Holdings' overall segment income will likely align with the figures from 2023. This projection is based on the expectation of balanced outcomes where the growth in the beverage and Transit segments, along with approximately $15 million in restructuring-related benefits, which are expected to repeat in 2025, will counterbalance an estimated $80 million headwind. This headwind stems from weaker performance in canmaking equipment, aerosols, and Mexican glass.
Looking ahead to 2025, the firm also expressed the belief that volume growth in North America for Crown Holdings might be more subdued. This is due to the expectation that the company will not continue to gain market share. The volume growth in North America is poised to moderate in 2025 unless there is an increase in promotional activities by consumer packaged goods companies. This cautious outlook has led to the revised rating and price target for Crown Holdings' shares.
InvestingPro Insights
In light of the recent downgrade by Truist Securities, it's valuable to consider additional metrics and insights from InvestingPro. Crown Holdings' commitment to returning value to shareholders is evidenced by its consistent increase in dividends, having raised them for three consecutive years. This could be a sign of management's confidence in the company's financial health and future prospects. Moreover, despite some analysts revising their earnings downwards for the upcoming period, the company's valuation suggests a strong free cash flow yield, which can be appealing for investors looking for cash-generating investments.
InvestingPro Data shows a market capitalization of $9.24 billion and a trailing twelve-month P/E ratio of 18.09, which could indicate that the stock is reasonably valued relative to earnings. The company has also maintained a healthy gross profit margin of 20.52% over the last twelve months. While revenue has seen a decline of 7.21% in the same period, the company remains profitable, which is supported by an EBITDA growth of 4.24%.
For those considering deeper analysis, there are additional InvestingPro Tips available that could provide further clarity on Crown Holdings' performance and potential. With the use of coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable insights.
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