Ball Authorizes Buyback - Analyst Blog
February 02 2012 - 6:30AM
Zacks
Ball Corporation (BLL) announced to buyback an approximate $200
million of common stock. It has opted for an accelerated stock
repurchase program with JPMorgan Chase & Co. (JPM) in a
privately negotiated transaction.
Ball Corp. would repurchase the stocks using cash on hand and
available borrowings. The transaction would reduce its common stock
approximately by 5.1 million shares.
Ball Corp. continues to enhance shareholders value through
repurchase and payment of dividends to the shareholders. Earlier,
in January 2012, the company decided to repurchase an aggregate of
30 million of its common stock. The repurchase authorization
replaced all the previous authorizations.
The company also raised cash dividend by nearly 43% to 10 cents
per share. Ball corp. is scheduled to pay the increased cash
dividend of 10 cents on March 15, 2012, to shareholders of record
on March 1, 2012.
Enjoying a strong financial position, Ball Corp. has cash and
cash equivalents, as of December 31, 2011 of $165.8 million, while
cash flow from operation in 2011 amounted to $956.7 million. The
sound financial position enables the company to carry on with its
share repurchase program.
Management expects to generate cash flow of approximately $450
million in 2012. The majority of the cash flow generated would be
used for repurchasing stocks in future. Moreover, the company plans
to achieve 10% to 15% earnings growth in 2012 and beyond.
The company is trying to focus on its core business. It has sold
its plastic pail assets which lie outside its strategic focus area.
Alongside, the expansion of its global metal beverage can business
is also on the cards. Accordingly, Ball acquired four low-cost
metal beverage packaging manufacturing plants from AB InBev in the
U.S. It has also announced its intent to acquire the remaining 65%
interest in a joint venture metal beverage can business and end
plant in China.
However, in the recently concluded quarter Ball Corporation’s
earnings fell nearly 11% to 47 cents per share. The poor
performance can be ascribed to the weaker 12-ounce beverage can
volumes in North America and Europe in addition to six fewer
accounting days. Moreover, sales in the company’s Metal Food and
& Household Products Packaging (Americas) and Aerospace segment
declined in the reported quarter.
Currently, the shares of Ball Corp. maintain Zacks #3 Rank (Hold
rating) over the short run. It faces competition from Crown
Holdings Inc. (CCK), Rexam Plc. (REXMY) and Silgan Holdings Inc.
(SLGN).
Based in Broomfield, Colorado, Ball Corp. is a manufacturer of
metal and plastic packaging, primarily for beverages and foods. It
also supplies aerospace and other technologies and services to
government and commercial customers.
BALL CORP (BLL): Free Stock Analysis Report
CROWN HLDGS INC (CCK): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
REXAM PLC-ADR (REXMY): Free Stock Analysis Report
SILGAN HOLDINGS (SLGN): Free Stock Analysis Report
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