Let’s dig into the relative performance of Ball (NYSE:BALL) and its peers as we unravel the now-completed Q2 industrial packaging earnings season.
Industrial packaging companies have built competitive advantages from economies of scale that lead to advantaged purchasing and capital investments that are difficult and expensive to replicate. Recently, eco-friendly packaging and conservation are driving customers preferences and innovation. For example, plastic is not as desirable a material as it once was. Despite being integral to consumer goods ranging from beer to toothpaste to laundry detergent, these companies are still at the whim of the macro, especially consumer health and consumer willingness to spend.
The 9 industrial packaging stocks we track reported a satisfactory Q2. As a group, revenues missed analysts’ consensus estimates by 0.7% while next quarter’s revenue guidance was 2.3% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate cut and future ones (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Ball (NYSE:BALL) Started with a $200 loan in 1880, Ball (NYSE:BLL) manufactures aluminum packaging for beverages, personal care, and household products as well as aerospace systems and other technologies.
Ball reported revenues of $2.96 billion, down 17% year on year. This print fell short of analysts’ expectations by 4.5%. Overall, it was a slower quarter for the company with a miss of analysts’ organic revenue estimates.
"We delivered strong second quarter results and returned $790 million to shareholders in the first half of 2024. Leveraging our strong financial position and leaner operating model, the company remains uniquely positioned to enable our purpose of advancing the greater use of sustainable aluminum packaging. We continue to complement our purpose by driving innovation and sustainability on a global scale, unlocking additional manufacturing efficiencies and enabling consistent delivery of high-quality, long-term shareholder value creation," said Daniel W. Fisher, chairman and chief executive officer.
Ball delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Interestingly, the stock is up 4.2% since reporting and currently trades at $66.52.
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Best Q2: Avery Dennison (NYSE:AVY) Founded as Kum Kleen Products, Avery Dennison (NYSE:AVY) is a manufacturer of adhesive materials, display graphics, and packaging products, serving various industries.
Avery Dennison reported revenues of $2.24 billion, up 6.9% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with an impressive beat of analysts’ organic revenue and operating margin estimates.
Avery Dennison pulled off the fastest revenue growth among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 6.7% since reporting. It currently trades at $209.36.
Silgan Holdings (NYSE:SLGN) Established in 1987, Silgan Holdings (NYSE:SLGN) is a supplier of rigid packaging for consumer goods products, specializing in metal containers, closures, and plastic packaging.
Silgan Holdings reported revenues of $1.38 billion, down 3.2% year on year, falling short of analysts’ expectations by 3.4%. It was a softer quarter as it posted a miss of analysts’ organic revenue and operating margin estimates.
Interestingly, the stock is up 5.6% since the results and currently trades at $51.45.
Graphic Packaging Holding (NYSE:GPK) Founded in 1991, Graphic Packaging (NYSE:GPK) is a provider of paper-based packaging solutions for a wide range of products.
Graphic Packaging Holding reported revenues of $2.24 billion, down 6.5% year on year. This result missed analysts’ expectations by 1.3%. Overall, it was a mixed quarter, with EPS exceeding expectations. Looking ahead, GPK maintained full year EPS guidance, showing that the company is on track.
The stock is up 6.6% since reporting and currently trades at $29.86.
International Paper (NYSE:IP) Established in 1898, International Paper (NYSE:IP) produces containerboard, pulp, paper, and materials used in packaging and printing applications.
International Paper reported revenues of $4.73 billion, up 1.1% year on year. This result was in line with analysts’ expectations. It was a very strong quarter as it also recorded an impressive beat of analysts’ earnings and operating margin estimates.
The stock is up 9.6% since reporting and currently trades at $50.39.
This content was originally published on Stock Story
