Shares of Sealed Air Corporation (SEE) hit a new 52-week high of $43.63 on Dec 24, 2014 and eventually closed a notch lower at $43.40. The stock price appreciation came on the back of strong third-quarter 2014 results and recent fall in oil prices.
This New Jersey-based provider of specialty packaging service has a market cap of $9.2 billion. Sealed Air has delivered a solid one-year return of about 30% and year-to-date return of around 29.3%, outperforming the S&P 500. Average volume of shares traded over the last three months is approximately 2504K.
Sealed Air’s Strengths
Sealed Air’s share price has been on a rise since it reported its third-quarter results on Oct 29. Adjusted earnings rose 24% year over year to 52 cents per share and also outpaced the Zacks Consensus Estimate of 46 cents. Sales also increased 9% year over year and came ahead of the Zacks Consensus Estimate.
Sealed Air raised its adjusted earnings per share guidance for 2014 in the range of $1.70 to $1.75, reflecting an increase of 22% to 26% from 2013. For 2014, the company anticipates capital expenditures of approximately $150 million and cash restructuring payments of approximately $100 million.
Despite anticipated volume declines in the protein market in North America and currency headwinds in the fourth quarter, Sealed Air remains on track to deliver EBITDA growth and margin expansion for the full year 2014. The company will also benefit from cost savings from its ongoing Integration & Optimization Program as well as its recent additional restructuring plan.
The share price was further boosted as oil prices went into a free fall and hit five-year low of $53.60 a barrel on Dec 16. Cheaper oil means lower gasoline prices. This, along with an improving employment scenario, will lead to a positive turn in consumer spending patterns and consequently, packaging demand and will facilitate Sealed Air’s growth.
Additionally, in an attempt to provide customers with an easy and quick access to its wide range of products, solutions and services, Sealed Air has recently launched a new website, SealedAir.com. The new website design demonstrates Sealed Air’s expertise as a knowledge-based innovator focused on sustainability.
Sealed Air’s focus on driving value for customers with the right products to meet their sustainability needs will aid in growth. The company intends to offer new products with measurable sustainability improvements and quantify their benefits for customers in their specific applications.
Moreover, Sealed Air stands to benefit from the relocation its headquarters, which will create a stronger, one-company culture and enable greater collaboration, accelerate innovation and drive operating efficiencies.
Further, the estimates for Sealed Air moved upward in the past 60 days. The Zacks Consensus Estimate for 2014 increased about 3% to $1.76 per share and for 2015 the same rose 4.6% to $2.05 per share.
Sealed Air currently sports a Zacks Rank #1 (Strong Buy).
Other Stocks to Consider
Other favorably ranked stocks in the same sector include Bemis Company, Inc. (BMS), MeadWestvaco Corp. (MWV) and Packaging Corporation of America (PKG). All these stocks carry a Zacks Rank #2 (Buy).
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