Balanced View on Bemis - Analyst Blog
April 23 2014 - 6:00PM
Zacks
On Apr 17, 2014, we issued an updated research report on
Bemis Company, Inc. (BMS). This manufacturer and
seller of packaging products and pressure sensitive materials is
expected to benefit from acquisitions as well as strong orders and
backlog.
The company broadened its presence in the Asia-Pacific with the
purchase of Foshan New Changsheng in Jul 2013. In addition, Bemis
recorded strong orders and backlog across all geographies. Going
forward, it is optimistic that product launches will drive
growth.
In Feb 2014, Bemis’ board of directors approved the 31st
consecutive annual increase in quarterly cash dividend to 27 cents
per share, which marked a 4% rise. In addition, the company
repurchased $2 million shares during 2013.
Bemis expects cash flow from operating activities to exceed $500
million in 2014. The company’s capital investment strategy will
support its dividend payouts and help to fund strategic
acquisitions and share repurchases during the year.
Bemis announced the shutdown of one of its Pressure Sensitive
Materials manufacturing facilities in Stow, OH in Mar 2014. This
will improve the company’s competitiveness and aid the long-term
growth of its Pressure Sensitive Materials business. In April 2014,
Bemis divested its Paper Packaging Division. The sale will enable
the company to focus on strategic opportunities in high-barrier
flexible packaging, medical and pharmaceutical packaging markets in
developing economies.
Bemis reported adjusted earnings of 54 cents per share for the
fourth quarter and a record $2.28 per share for full-year 2013, in
line with management’s guidance range. For the first quarter of
2014, management expects adjusted earnings per share in the band of
55–60 cents. For full-year 2014, earnings per share are projected
to range between $2.40 and $2.55, which represents a year-over-year
increase of 5%–12% from the previous year.
On the flip side, Bemis remains cautious about the weaker Brazilian
currency. Additionally, increased costs related to mechanical and
electrical issues that were faced during the transition of
production equipment from plants closed as part of the facility
consolidation remains a concern. Furthermore, Bemis’ revenues and
net income may be affected due to rise in commodity costs and
volatile economic conditions.
At present, Bemis has a Zacks Rank #3 (Hold).
Key Picks from the Sector
Some better-ranked stocks worth considering at the moment include
Berry Plastics Group, Inc. (BERY), Crown
Holdings Inc. (CCK) and KapStone Paper and
Packaging Corp. (KS). All of these have a Zacks Rank #2
(Buy).
BERRY PLASTICS (BERY): Free Stock Analysis Report
BEMIS (BMS): Free Stock Analysis Report
CROWN HLDGS INC (CCK): Free Stock Analysis Report
KAPSTONE PAPER (KS): Free Stock Analysis Report
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