Shares of Crown Holdings, Inc. (CCK) reached a new 52-week high of $51.15 on Jul 9, surpassing the previous high of $50.89 on Jun 10. The new high is due to expected benefits from inorganic growth and cost-reduction initiatives.
The stock closed a notch lower at $51.14 at the end of trading yesterday, with a solid one-year return of about 22.7% and year-to-date return of about 14.7%. The average volume of shares traded over the last three months was roughly 1004K.
This Philadelphia-based supplier of packaging products to consumer marketing companies has beaten the Zacks Consensus Estimate three times in the trailing four quarters with an average surprise of 3.91%. Crown Holdings has a market cap of $7 billion and long-term expected earnings growth of 12%.
Growth Drivers
Crown Holdings acquired Mivisa, a leading Spanish manufacturer of two- and three-piece food cans and ends in April. The acquisition will significantly ehance Crown Holdings position in the European food can segment. The buyout will boost margins and is expected to be accretive to earnings in 2014.
Further, Crown Holdings has embarked on a cost-reduction initiative to better align costs primarily in its food, aerosol and specialty packaging businesses, as a result of which approximately 235 employees will be laid off.in 2014. This will lead to annual cost savings of approximately $25 million.
Notably, Crown Holdings reported a 14% year-over-year rise in its first-quarter 2014 adjusted earnings to 57 cents per share, surpassing the Zacks Consensus Estimate of 51 cents per share.
For the second quarter of 2014, the company expects earnings per share between 90 cents and $1.00, excluding any impact from the Mivisa acquisition. Including the impact of Mivisa acquisition and excluding the impact of share repurchases, full-year earnings per share are expected to exceed the previous guidance of $3.15 to $3.35.
In addition, Crown Holdings began production at its plant in Turkey plant which is expected to boost the European Food segment’s revenue and profits once the plant becomes fully operational. Continued growth in European Beverage cans in a tight capacity environment creates scope for improving pricing as well as incremental capacity additions.
Crown Holdings currently holds a Zacks Rank #2 (Buy).
Other Stocks to Consider
However, some other stocks in the same industry with favorable Zacks Rank are Sonoco Products Co. (SON), Graphic Packaging Holding Company (GPK) and MeadWestvaco Corporation (MWV). While Sonoco Products sports a Zacks Rank #1 (Strong Buy), Graphic Packaging and MeadWestvaco Corporation carry the same Zacks Rank as Crown Holdings.
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