On Jul 5, 2014, we issued an updated research report on AptarGroup, Inc. (ATR). The global provider of consumer product dispensing systems remains committed to cost containment and investing in acquisitions.
AptarGroup’s strategic objectives mainly include investment in equipment and acquisitions that will contribute to growth. In 2012, AptarGroup acquired Stelmi Group, which marked AptarGroup’s foray into a new area of primary packaging components used in the injectable drug delivery market, while broadening its product portfolio and customer reach. So far, the business has performed well and is expected to continue being accretive to earnings in the future. AptarGroup’s $26 million investment in capacity expansion at Stelmi in 2014 will also strengthen the growth profile of its Pharma business.
In Dec 2013, AptarGroup acquired a 20% stake in Bapco Closures for approximately $5 million. In addition, AptarGroup secured an exclusive global license for Bapco’s innovative closure sealing technology that provides package integrity and tamper evidence. This global license along with Bapco Closures acquisition will give AptarGroup a better foothold in the market.
AptarGroup will also benefit from the targeted savings of $10 million to $12 million on an annualized basis from its restructuring plan in Europe which was substantially completed by 2013 end. Rightsizing its footprint should augment returns over the long term and also help to boost growth in Europe.
AptarGroup reported record results for first-quarter 2014, following which it expects earnings in the range of $0.78 to $0.83 per share for the second quarter of 2014. The company expects demand for innovative dispensing solutions to drive growth.
However, the emerging market currency environment is expected to remain challenging in the near term. Moreover, AptarGroup’s earnings will be negatively impacted by volatile raw material prices, increased competition and economic uncertainty.
AptarGroup currently carries a Zacks Rank #3 (Hold).
Other Stocks to Consider
Some better-ranked stocks in the same industry include Graphic Packaging Holding Company (GPK), MeadWestvaco Corporation (MWV) and Sonoco Products Co. (SON). All of these stocks have a Zacks Rank #2 (Buy).
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