Crown Earnings: Packaging Demand Headwinds Do Not Alter Our Long-Term View; Shares Remain Cheap

Narrow-moat-rated Crown Holdings reported underwhelming fourth-quarter results that capped off a challenging year. Net sales fell over 5% in the fourth quarter from a year ago as all but one segment reported significant declines. Weak consumer demand in Crown’s international markets persisted for much of the quarter, with both Europe and Asia experiencing volume declines that led to double-digit decreases in revenue in the fourth quarter. While we maintain our view that Crown’s aluminum can business will benefit from a long-term shift to eco-friendly packaging, we expect weakness in the company’s international markets will likely persist through the first half of 2024. As such, we've decreased our fair value estimate to $93 per share from $96 to reflect lower near-term revenue and profitability in our forecast.