Shares of MeadWestvaco Corporation (MWV) reached a new 52-week high of $45.30 on Nov 25, before closing at $44.93. MeadWestvaco has delivered a solid one-year return of about 34.8% and a year-to-date return of 28.5%, outperforming the S&P 500. Average volume of shares traded over the last three months is approximately 1070K.
Over the past 52 weeks, MeadWestvaco’s share price has ranged from a 52-week low of $33.59 on Feb 25, 2014, to a 52-week high of $45.30 on Nov 25, 2014. Richmond, VA-based MeadWestvaco is a global packaging company catering to healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries with a market cap of $7.49 billion. MeadWestvaco has long-term estimated earnings per share growth rate of 10%.
Growth Drivers
MeadWestvaco’s share price has witnessed an upward trend following its strong third-quarter results reported on Oct 28. Adjusted earnings increased 70% year over year to 63 cents per share, benefitting from gains across targeted, higher-value packaging and specialty chemicals end markets, while the bottom line grew on the back of strong operational performance, gains in productivity from major efficiency investments and cost reduction actions.
MeadWestvaco expects fourth-quarter 2014 earnings to be above the year-ago level driven by benefits from commercial and operational excellence strategies as well as continued contributions from productivity improvements and cost saving initiatives. Further, fourth-quarter results are expected to get a boost from higher consumer and industrial packaging volumes, ongoing value-based pricing initiatives across all packaging businesses, productivity improvements and continued operating leverage from increased mill and plant utilization rates.
MeadWestvaco embarked on an enterprise-wide overhead cost reduction plan in Apr 2013, which is expected to lead to cost savings of around $75 million by the end of 2014. Savings associated with the initiative were $43 million in 2013. The company is on track to achieve its target by 2014-end. Moreover, in Jan 2014, the company announced a new program that will simplify the structure of its packaging businesses and save $100 million to $125 million by 2015. Of this, at least $75 million is expected to be realized this year.
MeadWestvaco continues to expand its presence in the emerging markets through continued investments in Brazil, India and China. These markets provide a larger platform for growth where economic activity is well above the developed countries and the growing middle class is increasingly demanding higher-quality goods and packaging materials.
Other Stocks to Consider
MeadWestvaco currently holds a Zacks Rank #2 (Buy). Some other stocks worth considering in the sector include Mercer International Inc. (MERC), Crown Holdings Inc. (CCK) and Veritiv Corporation (VRTV). While Mercer sports a Zacks Rank #1 (Strong Buy), Crown Holdings and Veritiv hold the same rank as MeadWestvaco
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