Friday, August 30, 2013

Sealed Air Reaches 52-Week High - Analyst Blog

Hot Penny Companies To Watch For 2014

Shares of Sealed Air Corporation (SEE) attained a new 52-week high of $25.58 on Friday, Jul 5, 2013. The new high was primarily driven by expected benefits from its acquisition of Diversey, cost savings and the appointment of Jerome A. Peribere as the President and Chief Executive Officer.

This specialty packaging service provider has delivered a robust one-year return of about 66.32% and year-to-date return of about 47.64%. Average volume of shares traded over the last three months was approximately 1.9 million shares.

This Zacks Rank #3 (Hold) stock has a market cap of $5 billion and a long-term expected earnings growth rate of 15.97%.

Sealed Air's Strengths

Sealed Air's acquisition of Diversey has expanded its presence beyond specialty packaging solutions. This combination is expected to further enhance Sealed Air's earnings per share and free cash flow generation.

The company's ongoing Integration & Optimization Program to address the increasing macroeconomic weakness and realize additional cost reduction opportunities will generate cost savings and benefits of approximately $195 million to $200 million by the end of 2014.

1Q13 Earnings Miss, But Improved Outlook

Sealed Air reported first-quarter 2013 adjusted net earnings from continuing operations of 17 cents per share, up 6% from the year-ago earnings of 16 cents per share but a penny short of the Zacks Consensus Estimate. Volumes improved 1% and a positive 0.2% price/mix was offset by unfavorable foreign currency translation of 0.8%.

For fiscal 2013,the company expects adjusted earnings in the range of $1.10 to $1.20 per share on the back of net sales in the range of $7.7 to $7.9 billion. Adjusted EBITDA is expected in the range of $1.01 to $1.03 billion. Furthermore, free cash flow is expected in the range of $300-$350 million.
During its first quarter conference call, Sealed Air announced an earnings quality improvement plan intended at delayering management in a bid to make the company more cost efficient, especially in Europe. The plan is expected to result in annualized savings of approximately $80 million by the end of 2015 for an estimated total cost in the range of $180 to $200 million. Savings for 2013 are expected to be minimal and one-time cash costs for 2013 are estimated to be approximately $65 million.

Estimate Revisions

The Zacks Consensus Estimate for 2013 is currently pegged at $2.78 per share, reflecting a 5.23% year-over-year increase and within the company's guidance.

Other Stocks to Consider

Other stocks in the industry that are currently performing well and have a good visibility include Mobile Mini, Inc. (MINI), with a Zacks Rank #1 (Strong Buy), and Berry Plastics Group, Inc. (BERY) and Rock-Tenn Company (RKT), with a Zacks Rank # 2 (Buy).

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