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JPMorgan Has Rated Silgan Holdings as ‘Neutral’

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Sep. 14 2016, Published 2:06 p.m. ET

SLGN’s price movements

Silgan Holdings (SLGN) has a market cap of $3.0 billion. It fell 1.1% to close at $49.13 per share on September 13, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.85%, 2.4%, and -7.6%, respectively, on the same day.

SLGN is trading 1.4% above its 20-day moving average, 1.3% below its 50-day moving average, and 3.9% below its 200-day moving average.

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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 11.7% on September 13, 2016.

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

  • Ball (BLL): $13.8 billion
  • Crown Holdings (CCK): $7.8 billion
  • Berry Plastics Group (BERY): $5.5 billion

Silgan Holdings’ rating

JPMorgan has initiated coverage of Silgan Holdings with a “neutral” rating and has set the stock’s price target at $51 per share.

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Performance of Silgan Holdings in 2Q16

Silgan Holdings reported 2Q16 net sales of $874.6 million, a fall of 4.3% from $914.2 million in 2Q15. Sales of its metal containers, closures, and plastic containers fell 4.4%, 0.29%, and 9.7%, respectively, between 2Q15 and 2Q16. It reported rationalization charges of $5.0 million in 2Q16 compared to $1.0 million in 2Q15. The company’s gross profit margin and income from operations fell 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 to $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 20.6% and 28.4%, respectively, between 4Q15 and 2Q16. Its debt-to-equity ratio rose to 4.2x in 2Q16 compared to 4.0x in 4Q15.

Projections

Silgan Holdings (SLGN) has projected its adjusted EPS at $2.70–$2.90, which excludes rationalization charges for 2016. This guidance reflects a slow start to the European season and low demand from US pack customers.

SLGN also expects its adjusted EPS to be $1.20–$1.30, excluding rationalization charges, in 3Q16.

In the next part of this series, we’ll take a look at Carlisle Companies (CSL).

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