Ball Earnings: Global Shipment Growth Points to Upside Despite Macrouncertainty; Shares Attractive

Narrow-moat-rated Ball reported solid first quarter results that were slightly ahead of our expectations. Net sales rose almost 8% year over year, driven by strength in EMEA and South America. Notably, global aluminum packaging shipments grew 2.6% from a year ago, a welcomed change given shipment growth headwinds in the past few quarters. Demand in Europe remains strong, and results in North America appear to have finally turned a corner. Management noted the company’s exposure to tariffs is limited because most packaging products are manufactured and sold in the same region. In North America, some products cross country lines, but these products are generally included in USMCA. Nevertheless, Ball is not immune to a potential economic slowdown, which would have a material impact on the company’s beverage can shipments and affect operating rates at its plants. Ball has started the year on solid footing, but economic uncertainty and potential slowdown in consumer spending loom. We’ve increased our fair value estimate to $59 per share from $58 due to the time value of money.