On Jan 13, 2015, we issued an updated research report on Sealed Air Corporation (SEE). This specialty packaging service provider is likely to benefit from the recent drop in oil prices. In addition, relocation of its global headquarters along with investment in differentiated technologies through new product addition and acquisitions will also drive growth.
Since Jun 2014, the price of crude oil has plunged more than 40% from over $100 a barrel. Cheaper oil means lower gasoline prices; this will provide the company with a cost tailwind. This, along with an improving employment scenario, will lead to a positive turn in consumer spending patterns. This will boost packaging demand, facilitating Sealed Air’s growth.
Sealed Air has raised its adjusted earnings per share guidance for 2014 to the range of $1.70-$1.75, reflecting a year-over-year increase of 22% to 26%. Adjusted EBITDA is projected at $1.11 billion, up from the previously expected range of $1.085-$1.095 billion. The company is on track to deliver EBITDA growth and margin expansion for 2014.
Sealed Air continues to invest in differentiated technology. In the third quarter of 2014, the company completed the sale of IntelliTrail TASKI machine, an innovative web-based GPS system optimized for intelligence fleet management. Sealed Air believes that TASKI will be a key driver for future growth.
Additionally, the company acquired the Excel product line from Virox in 2014. Sealed Air is already connected to Virox through its Diversey Care business. Following the buyout, Virox’s PTS model, after being combined with Diversey Care segment’s sales coverage, application expertise and global distribution, will facilitate the expansion of AHP-based solutions in the Oxivir brand worldwide.
In 2014, Sealed Air relocated its global headquarters to a new, state-of-the-art campus in Charlotte, NC. The company anticipates that within the next three years, approximately 1,300 jobs will be relocated to Charlotte from current corporate headquarters along with the relocation of a small number of jobs from other locations. This move will create a stronger, one-company culture that will enable greater collaboration, accelerate innovation and drive operating efficiencies.
Furthermore, the estimates for Sealed Air have moved upward over the past 90 days. The Zacks Consensus Estimate for 2014 increased roughly 3% to $1.74 per share and for 2015, the same improved 5% to $2.06 per share.
Currently, Sealed Air sports a Zacks Rank #1 (Strong Buy).
Other Stocks That Warrant a Look
Other stocks worth considering in the same industry include Bemis Company, Inc. (BMS), AptarGroup, Inc. (ATR) and UFP Technologies, Inc. (UFPT). All these stocks carry a Zacks Rank #2 (Buy).
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