Narrow-Moat Aptar Has Exemplary Stewardship
This well-run but relatively unknown packaging company deserves attention.
AptarGroup (ATR) might be a lesser-known name in the packaging industry, but it's one to get to know. Its dispensing niche has proved to be very profitable, and the firm has carved out a narrow economic moat by leveraging its clean-room manufacturing capacity and its intellectual property to successfully partner with pharmaceutical companies through the expensive and challenging drug-approval process. We have also awarded Aptar an Exemplary Stewardship Rating for its consistently wise use of shareholder capital. The stock is currently trading above our $60 fair value estimate, but given that only 71 companies in Morningstar's coverage universe possess the combination of a wide or narrow economic moat, an investment-grade balance sheet, and an Exemplary Stewardship Rating, we believe Aptar is worth keeping on your radar.
Most packaging products--such as cardboard boxes, metal cans, and glass bottles--are undifferentiated and compete mainly on price. The packaging companies that do possess economic moats primarily derive their advantages from favorable industry dynamics or low-cost production. Aptar's economic moat, on the other hand, is substantiated by its ability to produce innovative and useful dispensing products through a robust research and development budget, clean-room manufacturing capacity, and close relationships with customers.
Todd Wenning does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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