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BMO Capital Upgrades Crown Holdings to ‘Outperform’

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Price movement

Crown Holdings (CCK) has a market cap of $7.8 billion. It rose 3.9% to close at $56.02 per share on September 27, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 4.5%, 5.4%, and 10.5%, respectively, on the same day.

CCK is trading 2.8% above its 20-day moving average, 4.1% above its 50-day moving average, and 10.3% above its 200-day moving average.

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Related ETFs and peers

The Guggenheim Mid-Cap Core ETF (CZA) invests 1.0% of its holdings in Crown Holdings. The ETF tracks the Zacks Mid-Cap Core Index, a proprietary select portfolio of 100 mid-cap stocks that seeks to outperform pure market-cap indexes.

The Vanguard Materials ETF (VAW) invests 0.98% of its holdings in Crown. The ETF tracks a very broad market-cap-weighted index of US materials companies. The YTD price movement of VAW was 13.7% on September 27, 2016.

The market caps of Crown Holdings’ competitors are as follows:

  • Ball Corporation (BLL): $13.9 billion
  • Silgan Holdings (SLGN): $3.0 billion

Crown Holdings’ rating

BMO Capital has upgraded Crown Holdings’ rating to “outperform” from “market perform.” It also increased the stock’s price target to $65 from $56 per share.

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Performance of Crown Holdings in 2Q16

Crown Holdings reported 2Q16 net sales of $2.1 billion, a fall of 8.7% from $2.3 billion in 2Q15. Net sales of its Americas beverage, North America food, European beverage, European food, and Asia Pacific segments fell 4.7%, 1.2%, 5.0%, 6.1%, and 9.4%, respectively, between 2Q15 and 2Q16. The company’s cost of products sold as a percentage of net sales and income from operations rose 3.4% and 6.5%, respectively.

Its net income and EPS (earnings per share) rose to $169.0 million and $1.21, respectively, in 2Q16, compared to $142.0 million and $1.02, respectively, in 2Q15. It reported adjusted EPS of $1.19 in 2Q16, a rise of 15.5% from 2Q15.

CCK’s cash and cash equivalents rose 28.5%, and its inventories fell 2.4% between 2Q15 and 2Q16. Its current ratio and long-term debt-to-equity ratio fell to 1.0x and 8.0x, respectively, in 2Q16, compared to 1.2x and 13.9x, respectively, in 2Q15. It reported adjusted free cash flow of $379.0 million in 2Q16, a rise of 75.5% from 2Q15.

Next, we’ll look at Brunswick Corporation (BC).

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