5 Reasons to Retain AptarGroup (ATR) in Your Portfolio

AptarGroup, Inc. ATR remains well poised to gain from its focus on strategies which include transformation activities in Beauty + Home segment, momentum in its Pharma business and expansion in growth economies despite elevated raw material costs.

AptarGroup is a global provider of consumer product dispensing systems catering to beauty, personal care, home care, prescription drug, consumer health care, injectables, food and beverage markets. Shares of this Zacks Rank #3 (Hold) company gained 10% in a year’s time, outperforming the industry’s growth of 5%.

The stock currently has a Zacks VGM Score of B. Here V stands for Value, G for Growth and M for Momentum. Such a score allows you to eliminate the negative aspects of stocks and select winners. The VGM Score of B, along with some other key metrics, makes the company a solid choice for investors.

Upbeat Second-Quarter Outlook: AptarGroup projects earnings per share for second-quarter 2018 in the range of 99 cents to $1.04. The company expects each segment to report elevated second-quarter revenues over the prior year. AptarGroup remains focused on strategies including transformation activities in Beauty + Home segment and select G&A functions. The company continues to proactively manage costs and remains focused on higher growth areas such as skin care, cosmetics and select beauty applications in the aforesaid segment. Furthermore, its focus on strategic M&A and expansion in growth economies such as Asia and the Middle East will bolster performance.

Transformation Plan to Aid Results: In late 2017, AptarGroup began a business-transformation plan in a bid to become a more agile, competitive and customer-centric business. This plan includes a wide range of initiatives to drive sales growth, enhance operational excellence along with improving organizational health and effectiveness. AptarGroup is poised to gain from its focus on the plan which is likely to yield annual recurring incremental EBITDA of approximately $80 million by the end of 2020. The company anticipates witnessing some of the incremental EBITDA in 2018.

Pharma Segment a Growth Driver: AptarGroup’s Pharma segment will benefit from solid underlying fundamentals in most regions and end markets. The company is experiencing continued adoption of its products for nasal spray systems (metered dose inhalers), injectable products and the ophthalmic market. Demand for decongestant applications is on the rise. The company has invested in additional capacity at Congers, NY facility to better serve U.S. customers in the injectables market. The facility began commercial shipments and is expected to ramp-up shipments during 2018. This will help support growth in the United States and also provide efficiency as production is optimized across facilities in Europe and the United States.

Return on Assets (ROA): AptarGroup currently has a ROA of 7.5%, while the industry's ROA is 5.6%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.

Growth Projections: Estimates for AptarGroup have been revised upward over the past 30 days, reflecting the brokers’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for both 2018 and 2019 both being moved north by 1%. The company also has an average positive earnings surprise history of 7.1%.

The Zacks Consensus Estimate for current-year earnings per share is pegged at $3.83, representing a year-over-year increase of 11.3% on 9.8% higher revenues of $2.7 billion.

For 2019, the consensus estimate for earnings per share is pegged at $4.22 on revenues of $2.82 billion, translating into a year-over-year rise of 10.3% and 4.2%, respectively.

The expected long-term earnings growth is pegged at 8.5%.

Some better-ranked stocks are Caterpillar Inc. CAT, Graco Inc. GGG and W.W. Grainger, Inc. GWW. All these stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Caterpillar has delivered an average positive earnings surprise of 33.44% in the trailing four quarters. Its shares have gained 46% over the past year.

Graco delivered an average positive earnings surprise of 12.8% in the last four quarters. Its shares have gone up 25% in a year’s time.

Grainger has an average positive earnings surprise of 18.7% in the trailing four quarters. Its shares have soared 76% over the past year.

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