On Dec 31, 2014, Zacks Investment Research upgraded AptarGroup, Inc. (ATR), the global provider of consumer product dispensing systems, to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).
Why the Upgrade?
Share price of AptarGroup have been on an upward trend ever since the company reported record third-quarter 2014 results on Oct 31. Adjusted earnings rose 6% year over year to 74 cents per share led by strong performance at the Food + Beverage and Pharma segments. Earnings per share came within the company’s projected range of 72 to 77 cents, ahead of the Zacks Consensus Estimate by a penny. With the latest earnings beat, the company has outperformed the Zacks Consensus Estimate in three of the last four quarters. Average earnings surprise for the last four quarters is 2.5%.
AptarGroup expects earnings in the range of 58 to 63 cents per share for the fourth quarter of 2014. However, the company anticipates the fourth quarter to be challenging. Consistent with the recent macroeconomic indicators, certain markets in Latin America and Europe are expected to be weaker than the last few quarters. Further, the company will face tough challenge in continuing the strong performance in fourth-quarter 2013, in which it had posted double-digit top-line growth.
Going forward, the company expects to benefit from investments in innovative solutions and implementation of cost-saving measures. AptarGroup will continue to identify new opportunities for innovative dispensing technologies across each of its segments.
AptarGroup launched two new technological innovations in the beauty market during the quarter. The company introduced several products in the drug market in Europe and for the consumer health care market in the U.S.
Shares of AptarGroup jumped following the Dec 17 announcement in which the company declared that it has entered into an agreement to repurchase approximately $250 million of its common stock under an accelerated share repurchase program. This program is part of AptarGroup’s $350 million share repurchase authorization announced on Oct 30, 2014. AptarGroup will also benefit from the slump in oil prices given that resin, a derivative of oil, constitutes a major portion of the cost of goods sold by the company.
Other Stocks to Consider
Some better-ranked stocks in the sector include Bemis Company, Inc. (BMS), Packaging Corporation of America (PKG) and Sealed Air Corporation (SEE). All of these stocks carry a Zacks Rank #2 (Buy).
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