While the packaging industry has been suffering from global supply chain disruptions, increasing e-commerce, rising purchasing power, and growing demand for quick and on-the-go packaged goods are bolstering this industry’s prospects.
Moreover, with increased environmental consciousness among consumers, brands are rapidly investing in sustainable and smart packaging solutions.
The U.S. packaging industry is expected to grow at a CAGR of 2.9% between 2022-2027 and reach $218.12 billion.
Significant investments to meet the growing demand for smart and durable packaging solutions across various sectors should help the global smart packaging market grow at a 5.5% CAGR to more than $38 billion by 2030.
Therefore, fundamentally strong packaging stocks Sealed Air Corporation (SEE), Berry Global Group, Inc. (BERY), and Greif, Inc. (GEF) could be solid additions to one’s portfolio now.
Sealed Air Corporation (SEE)
SEE provides food safety and security and product protection solutions and equipment in North America, South America, Europe, the Middle East, Africa, and Asia Pacific. Its Food segment offers integrated packaging materials and automation equipment solutions, and the Protective segment provides foam, inflatable, suspension and retention, and temperature assurance packaging solutions.
On December 6, SEE announced an $8 million investment in Highcon as a part of a strategic collaboration between the companies. Through this development, SEE is expected to leverage Highcon’s technology to develop new product offerings, expand into new segments, and enable manufacturing efficiencies. This should be strategically beneficial for SEE.
On October 18, SEE announced a $0.20 quarterly dividend payable on December 16, 2022. Its $0.80 annual dividend yields 1.50% at its current share price. It has a 1.51% four-year average dividend yield. In addition, the company’s dividend payouts have increased at a 4.6% CAGR over the past five years.
SEE’s net sales for the quarter ended September 30, 2022, came in at $1.40 billion. Its operating profit grew 13.3% from a year-ago value to $228 million, while its net earnings improved 24.6% from the prior-year quarter to $134.20 million. The company’s EPS rose 29.6% year-over-year to $0.92.
Analysts expect SEE’s revenue to increase 1.3% year-over-year to $1.44 billion for the second quarter ending June 30, 2023. Additionally, the $1.02 consensus EPS estimate for the same period indicates a 1% improvement year-over-year.
The stock has gained 22.6% over the past month to close the last trading session at $53.29.
SEE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
SEE has an A grade for Quality and a B grade for Sentiment. Among the 22 stocks in the A-rated Industrial – Packaging industry, it is ranked #9.
Click here to see the additional POWR Ratings for SEE (Growth, Value, Stability, and Momentum).
Berry Global Group, Inc. (BERY)
Packaging company BERY is a manufacturer and supplier of flexible, rigid, and non-woven products for use in consumer and industrial-end markets. The company functions through the broad segments of Consumer Packaging International; Consumer Packaging North America; Engineered Materials; and Health, Hygiene & Specialties.
The company’s $0.25 annual dividend yields 0.41% at its current share price. BERY declared its latest quarterly dividend of $0.25 on November 15, which is payable to its shareholders on December 15, 2022.
For the fiscal quarter ended October 1, BERY’s net sales and operating income came in at $3.42 billion and $336 million, respectively. Its operating EBITDA rose 9% from the prior-year quarter to $539 million. Moreover, its adjusted EPS improved by 18% year-over-year to $2.19 in the same period.
Street EPS estimate of $1.35 for the fiscal first quarter ending December 2022 indicates a 7.7% increase year-over-year. Also, the EPS estimate of $7.59 for the fiscal year ending September 2023 reflects a 2.6% rise year-over-year.
BERY’s stock has gained 27.2% over the past month to close the last trading session at $60.85.
It is no surprise that the stock has an overall B rating, which equates to a Buy in our proprietary rating system. BERY also has a B grade for Value. In the same industry, the stock is ranked #6.
To access the additional POWR Ratings for BERY for Growth, Momentum, Stability, Sentiment, and Quality, click here.
Greif, Inc. (GEF)
GEF is a global producer of industrial packaging products and services. The company operates through three segments: Global Industrial Packaging; Paper Packaging & Services; and Land Management.
On November 9, GEF announced a definitive agreement to acquire Lee Container Corporation, Inc., an industry-leading manufacturer of high-performance barrier and conventional blow molded containers, for a purchase price of $300 million.
“The Lee acquisition solidifies our commitment to growing our jerrycan and small plastic bottle footprint and adds a further growth engine to our GIP business,” said Ole Rosgaard, President and Chief Executive Officer of Greif. This should prove to be strategically beneficial for GEF.
On August 30, GEF declared a quarterly dividend of $0.50 per share, which was payable to its shareholders on October 1, 2022. Its annual dividend of $2.00 yields 2.88% on prevailing prices. The company’s dividend payouts have increased at a 2.2% CAGR over the past three years and a 2.3% CAGR over the past five years.
For the fiscal third quarter that ended July 31, 2022, GEF’s net sales increased 8.8% year-over-year to $1.62 billion. The company’s operating profit increased 18.8% year-over-year to $205.70 million. Also, its net income rose 23.4% year-over-year to $146.10 million, while its class A common stock EPS grew 24.9% from its prior-year quarter to $2.36.
For the fiscal year ended October 2022, GEF’s EPS and revenue are expected to increase 42.7% and 15.8% year-over-year to $7.99 and $6.43 billion, respectively. The company has surpassed the consensus EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 15.1% year-to-date to close the last trading session at $69.50.
The stock has an overall rating of B, translating to a Buy in our proprietary rating system. GEF also has a B grade for Value and Quality. Within the Industrial– Packaging industry, it is ranked #3 out of 22 stocks.
Beyond what we’ve stated above, we have also given GEF grades for Growth, Momentum, Stability, and Sentiment. Get all GEF ratings here.
SEE shares were trading at $53.01 per share on Tuesday morning, down $0.28 (-0.53%). Year-to-date, SEE has declined -20.34%, versus a -15.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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