Sealed Air Earnings: Strong Start to Year on Improving End-Market Demand; Shares Attractive

Narrow-moat Sealed Air reported solid first-quarter results as end-market recovery continued. Net sales declined 1.5% year over year as positive growth in the food business was more than offset by weakness in protective. That said, Sealed Air’s cost management initiatives continued to benefit margins, with consolidated operating margin expanding 130 basis points to 13.9%. Sealed Air has navigated a challenging operating environment for much of the past two years as inventory destocking and inflationary headwinds weighed on results. While destocking headwinds are largely behind the company, some activity persists in EMEA, and industrial end markets remain constrained. We maintained our $54 per share fair value estimate.