Silgan Earnings: Pricing Gains Are Offset as Destocking Headwinds Persist; Share Fairly Valued

No-moat-rated Silgan Holdings reported underwhelming first-quarter earnings. Net sales fell 7% year over year as all three segments experienced declines, while consolidated operating margins contracted 80 basis points to 8.5%. Silgan experienced volume declines across much of its portfolio as inventory destocking activities continued to constrain demand. That said, pricing gains offset some of the declines during the quarter, and we expect this trend to continue. We maintain our view that destocking headwinds will moderate for Silgan in 2024, but this will likely be weighted toward the second half of the year. As such, we've decreased our fair value estimate to $41 from $42 per share due to lower near-term revenue in our forecast.