We issued an updated research report on Ball Corporation BLL on Jul 1, 2015. Performance of this metal and plastic packaging company will mainly be hurt by adverse currency translation. Elevated aluminum premiums, pricing pressure in China and weak demand in Brazil also remain headwinds for Ball Corporation.
Ball Corporation’s first-quarter 2015 results were considerably affected by foreign exchange volatility. Given the company’s extensive exposure to Europe, strengthening of the dollar against the euro represents a significant concern. Consequently, the company expects currency translation to remain a headwind for the balance of 2015.
Ball Corporation also witnessed higher metal premiums in Europe and start-up costs in the first quarter. The food and household segment suffered due to the customer shift in the U.S. food cans. Hence, metal premiums and startup costs will persist as headwinds in the second quarter of 2015.
In the Asia segment, pricing continues to be an issue as excess capacity and intense competition from domestic can producers have led to pricing pressure in China. Though the company witnessed volume growth in the segment during the first quarter, it expects volumes to decline in the second quarter.
Notably, Ball Corporation’s results in Brazil will be pitted against the increased sales during the Soccer World cup last year, leading to tough comparisons. Brazil was also largely impacted in the first quarter by customer mix. The company anticipates that volumes will be relatively flat in 2015.
Ball Corporation’s pending acquisition of Rexam, new facilities, increase in capacity and new product introduction will bring growth opportunities in the coming years. However, risks surrounding Ball Corporation’s Aerospace & Technologies segment including funding cuts and delays, technical uncertainties, budget changes and competitive activity will hurt the company’s growth.
This Zacks Rank #4 (Sell) stock has witnessed downward estimate revisions over the last 90 days. The Zacks Consensus Estimate decreased roughly 7.3% to $3.56 per share for 2015 and fell 6.7% to $3.89 per share for 2016.
Key Picks from the Sector
Better-ranked stocks in the same sector include AGCO Corporation AGCO, Astec Industries, Inc. ASTE and Mobile Mini, Inc. MINI. All these companies hold a Zacks Rank #2 (Buy).
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