How Did Silgan Holdings’ 2Q16 Earnings Turn Out?

Price movement 

Silgan Holdings (SLGN) has a market cap of $3.0 billion. It fell by 5.1% to close at $49.99 per share on July 27, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -4.5%, 2.0%, and -6.3%, respectively, on the same day. SLGN is trading 3.5% below its 20-day moving average, 2.0% below its 50-day moving average, and 3.4% below its 200-day moving average.

How Did Silgan Holdings’ 2Q16 Earnings Turn Out?

Related ETF and peers

The Vanguard Materials ETF (VAW) invests 0.30% of its holdings in Silgan. The ETF tracks a very broad market-cap-weighted index of US materials companies. The YTD price movement of VAW was 16.1% on July 27.

The market caps of Silgan’s competitors are as follows:

  • Ball (BLL) — $10.1 billion
  • Crown Holdings (CCK) — $7.5 billion
  • Berry Plastics Group (BERY) — $5.0 billion

Performance of Silgan Holdings in 2Q16

Silgan Holdings reported 2Q16 net sales of $874.6 million, a fall of 4.3% from the net sales of $914.2 million in 2Q15. Sales of metal containers, closures, and plastic containers fell by 4.4%, 0.29%, and 9.7%, respectively, between 2Q15 and 2Q16. It reported rationalization charges of $5.0 million in 2Q16, compared with $1.0 million in 2Q15. The company’s gross profit margin and income from operations fell by 0.16% and 13.5%, respectively.

Its net income and EPS (earnings per share) fell to $33.3 million and $0.55, respectively, in 2Q16, compared with $42.2 million and $0.70, respectively, in 2Q15. It reported adjusted EPS of $0.60 in 2Q16, a fall of 15.5% from 2Q15.

Silgan’s cash and cash equivalents and inventories rose by 20.6% and 28.4%, respectively ,between 4Q15 and 2Q16. Its debt-to-equity ratio rose to 4.2x in 2Q16, compared with 4.0x in 4Q15.

Projections

The company has projected adjusted EPS in the range of $2.70 to $2.90, which excludes rationalization charges for fiscal 2016. This guidance reflects a slow start to the European season and low demand from US pack customers. It also expects adjusted EPS in the range of $1.20 to $1.30, which excludes rationalization charges for fiscal 3Q16.

In the next part of this series, we’ll take a look at Coca-Cola.