Here's Why Ball Corp (BLL) Stock is an Attractive Bet Now
Ball Corp (BLL) is likely to gain from surging beverage can demand and focus on investments to expand production capacity to meet the same.
Ball Corporation BLL is well-poised for growth on the back of robust beverage can demand and forecast-beating second-quarter 2021 results. The company has been investing significantly to expand beverage can production capacity in order to capitalize on customers’ surging demand for aluminium packaging. Robust backlog levels and business wins continue to drive the Aerospace segment. These factors position the company as a promising investment option at the moment.
The company currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
Let's delve deeper into the factors that make the Ball Corporation stock a compelling investment option at the moment.
Earnings & Sales Top Estimates in Q2
Ball Corporation reported second-quarter 2021 adjusted earnings per share of 86 cents, which beat the Zacks Consensus Estimate of 83 cents. The bottom line improved 32% year over year. Revenues of $3,459 million increased 23% year over year and surpassed the consensus mark of $3,256 million.
Impressive Price Performance
The stock has gained 18.4% over the past six months, outperforming the industry’s growth of 16.5%.
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Positive Earnings Surprise Trend
The company has a trailing four-quarter earnings surprise of 7.6%, on average.
Upbeat Growth Projections
The Zacks Consensus Estimate for 2021 earnings per share is currently pegged at $3.55, indicating growth of 19.5% from the prior year. The same for 2022 stands at $4.20, suggesting an improvement of 18.4% year over year. The stock has an estimated long-term earnings growth rate of 5%.
Other Growth Drivers
Ball Corporation has been witnessing strong growth in its top and bottom line over the past few quarters on solid global beverage-can demand. Customers have been preferring cans over plastic on rising environmental awareness. In fact, aluminium cans are the most widely recycled beverage packaging option. An estimated 75% of new beverage product launches are now in cans. By 2025, the global beverage can industry is projected to grow by approximately 100 billion units. Ball Corporation is aggressively investing in can plant capacity expansion to capitalize on this demand.
In the Beverage packaging, North and Central America segment, the new Glendale, AZ facility successfully started operations in its second and third lines in the second quarter, and the Pittston, PA facility commenced initial beverage can production on two lines in the same quarter. Both facilities are expected to add incremental capacity throughout 2022 and beyond to meet the growing demand. The new aluminum end manufacturing facility in Bowling Green, KY is expected to begin production in late 2021.
The Beverage Packaging, EMEA segment will gain from the multiple beverage can manufacturing plants additions in the U.K. and Russia. European beverage can volumes are anticipated to be up high-single digits in 2021 and beyond. In the Beverage Packaging, South America segment, the company expects can growth in mid-teens. The multi-line facility in Frutal, Brazil, is likely to commence production in the back half of this year. Overall, the company is on track to add at least 25 billion units of capacity by 2023 end.
Contracted backlog at the Aerospace segment was a record $3 billion as of the second-quarter 2021 end. Contracts already won but not yet booked into the current contracted backlog was $5 billion. The segment continues to win and provide mission-critical programs and technologies to U.S. government, defense, intelligence, reconnaissance and surveillance customers. Multiple projects to expand manufacturing capacity, test capabilities and engineering, and support workspace are on track.
Other Stocks to Consider
Some other top-ranked stocks in the Industrial Products sector are Encore Wire Corporation WIRE, Terex Corporation TEX and Lincoln Electric Holdings, Inc. LECO. While Encore Wire and Terex sport a Zacks Rank #1, Lincoln Electric carries a Zacks Rank #2, at present.
Encore Wire has a projected earnings growth rate of 332.6% for fiscal 2021. So far this year, the company’s shares have gained 45%.
Terex has an estimated earnings growth rate of 2,207.6% for 2021. The company’s shares have gained 47.4% so far this year.
Lincoln Electric has an expected earnings growth rate of 45.1% for 2021. The stock has appreciated 22%, year to date.
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