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Dividend Time for Sealed Air

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Price movement of Sealed Air

Sealed Air Corporation (SEE) has a market cap of $8.5 billion. SEE fell by 0.76% to close at $43.10 per share on February 17, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 6.6%, 5.3%, and -3.4%, respectively, as of that date.

At times, the stock has broken the support of all moving day averages. Currently, SEE is trading 5.5% above its 20-day moving average, 2.0% above its 50-day moving average, and 9.8% below its 200-day moving average.

The Materials Select Sector SPDR ETF (XLB) invests 1.8% of its holdings in Sealed Air. XLB tracks a market-cap-weighted index of US basic materials companies. The fund includes only the materials components of the S&P 500. The YTD price movement of XLB was -6.6% as of February 16, 2016.

The market caps of Sealed Air’s competitors are as follows:

  • Bemis Company (BMS)—$4.6 billion
  • AptarGroup (ATR)—$4.6 billion
  • Sonoco Products (SON)—$4.3 billion
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Sealed Air’s dividend and performance in 4Q15 and 2015

Sealed Air has declared a quarterly cash dividend of $0.13 per share on its common stock. The dividend will be paid on March 18, 2016, to shareholders, as recorded at the close of business on March 4, 2016.

Sealed Air reported 4Q15 net sales of nearly $1.75 billion, a fall of 11.1% compared to net sales of $1.97 billion in 4Q14. Its gross profit margin rose by 6.5% in 4Q15 compared to 4Q14. Its net income and EPS (earnings per share) rose to $123.5 million and $0.62, respectively, in 4Q15, compared to $66.3 million and $0.31, respectively, in 4Q14.

2015 results

In 2015, SEE reported net sales of just over $7 billion, a fall of 9.3% YoY (year-over-year). The company’s cost of sales as a percentage of net sales fell by 3.1%, and its operating profit rose by 16.8% in 2015. Its net income and EPS rose to $335.4 million and $1.62, respectively, in 2015, compared to $258.1 million and $1.20, respectively, in 2014.

Meanwhile, its cash and cash equivalents rose by 11.1%, and inventories fell by 4.0% in 2015. Its current ratio fell to 1.2, and its debt-to-equity ratio rose to 13.1 in 2015, compared to a current ratio and a debt-to-equity ratio of 1.5 and 5.8, respectively, in 2014. The price-to-earnings and price-to-sales ratios of Sealed Air were 26.4x and 1.2x, respectively, as of February 17, 2016.

Projection

The company has made the following projection for fiscal 2016:

  • net sales to be ~$6.8 billion, which assumes an unfavorable impact of ~$400 million from foreign currency translation
  • adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) in the range of $1.17 billion–$1.19 billion, which assumes $65 million in unfavorable currency translation
  • adjusted EPS in the range of $2.52–$2.60
  • an adjusted tax rate of 24%
  • free cash flow of ~$550 million, including capital expenditures of ~$275 million and cash restructuring payments off ~$110 million

Continue to the next part for our discussion of Spectrum Brands.

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