Bank of America Merrill Lynch Downgrades Bemis to ‘Underperform’

Bemis (BMS) has a market cap of $4.7 billion. It fell 0.30% to close at $49.98 per share on December 7, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.18%, 4.2%, and 14.5%, respectively, on the same day.

BMS is trading 1.5% above its 20-day moving average, 1.3% above its 50-day moving average, and 0.31% below its 200-day moving average.

The Vanguard Materials ETF (VAW) invests 0.68% of its holdings in Bemis. The YTD price movement of VAW was 24.9% on December 7.

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

• Sealed Air (SEE): $9.2 billion
• Avery Dennison (AVY): $6.5 billion
• Berry Plastics Group (BERY): $6.1 billion

On December 7, 2016, Bank of America Merrill Lynch downgraded Bemis’s rating to “underperform” from “neutral.”

Bemis reported 3Q16 net sales of $1.03 billion, a rise of 1.0% compared to net sales of $1.02 billion in 3Q15. Compared to 3Q15, sales of US packaging fell 4.7%, and sales of global packaging rose 12.7% in 3Q16.

The company’s gross profit margin and operating margin rose 10 basis points and 90 basis points, respectively, in 3Q16 compared to 2Q16.

Bemis’s net income and EPS (earnings per share) rose to $68.6 million and $0.72, respectively, in 3Q16 compared to $62.5 million and $0.64, respectively, in 3Q15. It reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] and adjusted EPS of $160.7 million and $0.75, respectively, in 3Q16. That’s a rise of 8.3% and 11.9%, respectively, compared to 3Q15.

Bemis’s cash and cash equivalents and inventories rose 33.6% and 8.1%, respectively, in 3Q16 compared to 4Q15.

Bemis (BMS) has made the following projections for fiscal 2016:

• adjusted EPS of $2.65–$2.70
• cash from operations of $425.0 million–$465.0 million
• capital expenditure of ~$200.0 million

In the next part we’ll take a look at AptarGroup (ATR).