Stock (Symbol) |
Ball (BLL) |
Stock Price |
$41 |
Sector |
| Food & Necessities |
Data is as of |
| September 21, 2017 |
Expected to Report |
| Nov 1 |
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 |
 Last year Colorado based container company Ball (BLL) container the acquired beverage can company Rexam, which was based in the UK. After the deal was announced Ball managment said it and expects 20% profit growth for 2017. That claim helped boost the stock, but there’s still 20% upside to my 2018 Fair Value, and I feel this stock still has room to run. 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. 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%. Ball is seeing strong demand for craft beer, super premium beer and Imported Mexican beer brands, and that gives the company nice opportunity to expand moving forward. Management has a long-standing financial strategy of 10% to 15% profit growth over time, and analysts have an Est. LTG of 11% per year on the stock. Ball sells for 20 times earnings, which is my Fair Value, and I feel the stock could rise from a recent $41 to $49 by 2018. |
One Year Chart |
 This stock hasn’t moved in the last year, but I bought it on a dip, so its been good to my investors. Last qtr BLL had 1% profit growth which met estimates as sales rose 41% due to the acquisition. Profits wren’t good due to tough comparisons from the year-ago-period. Looking ahead, qtrly profit Estimates are 23%, 20%, 9% and 25%. That would be solid. The Est. LTG of 11% a year is ok for a safe stock like this, as is the P/E of 20. |
Fair Value |
 With profits growing faster than normal, my Fair Value of 20x earnings is higher than it normally would be. Note this stock had a P/E of 11 to 15 in prior years (I think 11 was too low, and 15 was about right). |
Bottom Line |
 Ball Corp is in a basic manufacturing business, but management uses acquisitions and stock buybacks to grow faster. This is a solid stock for conservative investors, and has the ability to deliver double-digit annual returns (as it has been). But right now the stock’s fairly valued so I’m pulling it down in my Conservative Portfolio Power Rankings from 10th to 16th. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 16 of 33 |
