Stock (Symbol) |
Ball (BLL) |
Stock Price |
$42 |
Sector |
| Food & Necessities |
Data is as of |
| July 1, 2017 |
Expected to Report |
| Aug 3 |
Company Description |
 Ball Corporation is a supplier of metal packaging to the beverage, food, personal care and household products industries. It produces steel food, aerosol and extruded aluminum aerosol containers and aluminum slugs. Its aerospace business designs, develops and manufactures aerospace systems for civil, commercial and national cyber security aerospace markets. Source: Thomson Financial |
Sharek’s Take |
 Container company Ball (BLL) is seeing strong demand for craft beer, super premium beer and Imported Mexican beer brands. But what really is helping profits is the recent acquisition of Rexam. Founded in 1880, Ball Corporation is the largest manufacturer of beverage cans in the world, with 27 can sizes in North America and 75 beverage plants worldwide. Last year the Colorado based Ball acquired beverage can company Rexam, which was based in the UK. Now the company is cutting costs to spur profit growth such as closing Rexam’s headquarters. Ball goes into debt to “lever up” and make an acquisition, then rapidly pays down the debt, invest in high return projects, and then return cash to shareholders with share repurchases and dividends. Management just increased the dividend 54% to $0.40 a year, but the yield is still just 1%. Overall, analysts have an Est. LTG of 11% a year on the stock, with BLL expected to post profit growth of 23% this year. Management has a long-standing financial strategy of 10% to 15% profit growth over time, and expects 20% profit growth this year. The stock sells for 20x earnings, which is in line with my expectations, but my 2018 Fair Value of $51 is 21% higher than the recent quote. |
One Year Chart |
 Ball reported profit growth of 31% last qtr which beat expectations of 24%. Revenue grew 40% due to the Rexam acquisition. The stock jumped from $38 to $40 on the news and broke out of a 6 month pattern, then went to new highs in the following weeks. Management lowered next qtr’s estimate, and now analysts have qtrly Estimates of -1%, 29% and 27% profit growth the next 3 qtrs (there is no 4QtrsOutEst). The Est. LTG increased from 9% to 11% this qtr, and with the 1% yield that would be a 12% estimated total return — not bad for a safe stock. |
Fair Value |
 Ball has had a solid history of profit growth, outside 2015-2016. My Fair Value continues to be 20x earnings. Last qtr this stock was $36 (after accounting for a recent 2-for-1 split) and the recent rise in the stock price has zapped some of the near-term upside. |
Bottom Line |
 Ball Corp is in a basic manufacturing business, but management uses acquisitions and stock buybacks to grow faster. Profits could grow 20% this year and next, and with a P/E of 20 the stock is reasonably priced with decent upside a year out. BLL ranks 8th in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 8 of 33 |
