Ball Corp (BLL) to Report Q1 Earnings: What’s in the Offing?

Ball Corporation BLL is expected to report first-quarter 2018 results before the opening bell on May 3.

In the last-reported quarter, the company’s adjusted earnings surpassed the Zacks Consensus Estimate by more than 15%. Notably, Ball Corporation’s earnings outpaced estimates in two out of the trailing four quarters, with an average positive earnings surprise of 2.51%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Ball Corporation expects that prevalent headwinds in domestic beer consumption will have dampened first-quarter results. Due to persistent pressure on domestic mass beer declines, the company's North American segment volumes remained flat in fourth-quarter 2017 versus the industry. Further, challenging food-industry dynamics and supply disruptions in North American beverage due to the hurricanes in 2017 remain headwinds.

The Zacks Consensus Estimate for net sales of Ball Corporation's Beverage packaging North and Central America segment is pegged at $955 million for the quarter, representing year-over-year increase of 0.6%.

It is also expected to have witnessed difficult manufacturing performance in the food and aerosol business. The Zacks Consensus Estimate indicates that Ball Corporation's Food and Aerosol Packaging segment's revenues will reach $287 million in the to-be-reported quarter, reflecting year-over-year growth of about 5.5%.

Ball Corporation's Aerospace business reported an improved performance in the last reported quarter, driven by solid contract performance and continuing progress on new contracts. The segment is anticipated to have benefited from the company’s focus on world-class technology and proficiency. The Zacks Consensus Estimate for this segment’s net sales is pegged at $252 million for the quarter, reflecting 6.8% year-over-year improvement.

In Brazil, Ball Corporation's volume growth is predicted to be slower than the market rate due to competition. We expect net sales for Ball Corporation's Beverage packaging, South America segment to be around $382 million, reflecting an increase of around 3% year over year.

Furthermore, the company's performance might have been marred by volatile volumes in the Europe, Middle East and Africa (EMEA) beverage-can business. Our consensus estimates indicate that Ball Corporation's sales in the Beverage packaging, Europe segment will reach $551 million in the first quarter, reflecting year over year growth of 8.5%.

Notably, though the company continues to make progress on global finance transformation projects and corporate cost-cutting initiatives, Ball Corporation will face tight supply and demand situation.

Thus, the Zacks Consensus Estimate for Ball Corporation’s earnings went up roughly 2.4%, over the last 90 days, and is currently pegged at 43 cents for the quarter. The earnings estimate reflects year-over-year growth of around 13%. The Zacks Consensus Estimate for total sales of $2.6 billion for the quarter also indicates 5% growth from the prior-year quarter.

Moreover, shares of Ball Corporation have gained 5.4% over the past year, underperforming 1.4% growth recorded by the industry due to the prevalent headwinds.

Earnings Whispers

Our proven model does not conclusively show that Ball Corporation is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for Ball Corporation is -6.20%. This is because the Most Accurate estimate is 40 cents, while the Zacks Consensus Estimate is currently pegged at 43 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Ball Corporation currently carries a Zacks Rank #4 (Sell).

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Alarm.com Holdings, Inc. ALRM, with an Earnings ESP of +5.44% and a Zacks Rank #1. The stock has appreciated 23% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.

I-VI Incorporated IIVI, with an Earnings ESP of +2.78% and a Zacks Rank #2. Its shares have rallied roughly 14% in the past year.

Mobile Mini, Inc. MINI, with an Earnings ESP of +3.03% and a Zacks Rank #3. The company’s shares have surged 48% during the past year.

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