Company Reports

Narrow-moat-rated Ball reported a solid first quarter despite challenging end market dynamics. Net sales declined 3.5% year over year, mainly due to the pass through of lower aluminum costs as shipments across the company held up relatively well. Ball has navigated a challenging operating market for well over a year now as inventory destocking weighed on volumes across much of its portfolio. It appears destocking headwinds have abated, and customers have returned to more normalized purchasing patterns. While some near-term demand headwinds remain, we think strength in EMEA and South America will drive positive volume growth for the full year. As such, we have maintained our $60 fair value estimate.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat-rated Ball Corp finished the challenging year on a high note as the company reported solid fourth-quarter results. Net sales in the fourth quarter declined 4% year over year due to weakness in North and Central America, but Ball’s operating margin expanded 350 basis points to 8.8% as the company benefited from favorable pricing and lower costs in the quarter. While global beverage can shipments were down 3.2% in the quarter, we remain confident that Ball will benefit from a long-term shift to eco-friendly packaging. We've increased our fair value estimate to $60 per share from $58 due to the time value of money and a slight increase in our near-term forecast.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat-rated Ball reported somewhat lackluster results as most of its end markets continued to experience moderating demand. Net sales fell almost 10% year over year, largely driven by weakness in North and Central America and EMEA. Inventory destocking continues to plague Ball’s beverage businesses as customers work down built-up inventories and enact stricter inventory management. While we maintain our view that Ball will benefit from a long-term shift to eco-friendly packaging, we expect near-term headwinds to persist into the first half of 2024. As such, we have maintained our $58 fair value estimate.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Before market open on Aug. 17, Ball Corp. announced its long-awaited agreement to sell its aerospace business for $5.6 billion in cash to BAE Systems, a British defense company. The sale price is slightly higher than the rumored $5 billion price tag, but we think BAE was likely willing to pay up for Ball’s formidable aerospace business amid strong interest from other defense companies and private equity firms, given BAE can likely achieve synergies with its current aerospace operations. The sale price values the business at approximately 19.5 times last-12-months comparable EBITDA, which we think is a favorable price for Ball. As such, we have increased our fair value estimate to $58 from $55 per share.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat rated Ball reported underwhelming but somewhat expected second quarter results as demand remained constrained across many of its end markets. Net sales tumbled almost 14% as all three beverage segments saw double-digit declines in the quarter. Persistent inventory destocking and normalizing consumer demand continue weigh on Ball’s operating results. We maintain our view that Ball will benefit from a long-term shift to eco-friendly packaging, but demand headwinds are likely to weigh on beverage can volumes through the end of the year. We've decreased our fair value estimate to $55 from $59 per share due to lower near-term revenue in our forecast.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat-rated Ball delivered solid first-quarter results amid a difficult operating environment. Excluding its divested Russia business, global beverage can shipments declined 1.4% year over year, due to softening demand in North and South America. However, consolidated segment operating margin improved 110 basis points (30 basis points excluding effects of a one-time settlement) over the prior year to 10.9% due to inflationary cost recovery and operational efficiencies. Margins also saw significant sequential improvement. Consistent with our prior outlook, we expect volumes to remain pressured in the first half of 2023 as consumers temper spending and excess inventory is worked down, though we see the potential for a demand rebound in the latter half of the year. As such, we maintain our fair value estimate of $59.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat-rated Ball Corporation reported solid full-year 2022 results, while fourth-quarter performance was mixed. Excluding its divested Russia business, beverage can shipments decreased 1% in the fourth quarter but were up over 2% for full-year 2022. Consolidated operating margins in the fourth quarter contracted 230 basis points from a year ago to 8.0%. Lower volumes in North and Central America and higher operating costs weighed on margins during the quarter. Looking ahead to 2023, we expect volumes to remain pressured as consumers look to regulate spending, while margins should see some relief as Ball works through its higher-cost inventory early in the year.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat-rated Ball reported mixed third-quarter results as solid end market demand was met with persistent inflationary pressure. Revenue increased 11% year over year on positive volume growth and higher selling prices. Consolidated operating margins grew roughly 650 basis points year over year to 13.2%. Ball’s addition of cost recovery methods in its contracts offset much of the rising costs the firm experienced during the quarter. We expect full-year 2022 consolidated operating margins to reach 9.5%, a 20-basis point improvement from 2021, due to Ball’s commitment to its cost recovery methods.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat-rated Ball Corporation held its investor day on Sept. 22, where it provided updates on its segment operations and end-market outlook. Following the event, our $60 fair value estimate is unchanged, as our long-term thesis remains intact. Despite the announcement of capacity curtailment last month, Ball’s end-market demand remains strong. Aluminum can volume is up 2.4% year over year through June of this year while the firm continues to realize selling price increases. Management made a rare misstep when committing to rapid capacity expansion last year in hopes of fulfilling new end market demand. We think this was a one-time mistake that will lead to more disciplined capital spending in the future.

Ball is the world's largest producer of aluminum beverage cans. Used primarily for carbonated soft drinks and beer, aluminum cans are historically a low-growth industry but one with favorable competitive dynamics for incumbents. Ball became the world’s largest producer of aluminum beverage cans in 2016 with its sizable acquisition of Rexam. As a condition of the acquisition, Ball was required to divest eight aluminum can plants in the United States. These assets were sold to Ball’s competitor, Ardagh. Since the acquisition, Ball has divested from specific industries (such as steel food and aerosol containers) and regions (China) to focus on producing aluminum cans in markets where it can earn strong economic profits.

Narrow-moat Ball Corp. reported second-quarter results that were largely in line with our expectations, but management raised concerns of an unexpected deceleration in beverage packing demand. Revenue increased roughly 20% year over year on higher selling prices and a slight rise in volume. Consolidated adjusted operating margin came in at 9.5% for the quarter, a 200-basis-point decrease from a year ago. Increased selling prices were not enough to offset higher operating costs during the quarter. We expect additional pricing action as inflationary pressures persist in the second half of the year.