The way I approach the markets, I want to find not only the right
companies, but the right companies trading at the right price. I have no
qualms at all that Silgan (SLGN)
fits into the first bucket. I also don't dispute the idea that the
company can, over time, grow its closures business and build its
presence in emerging markets. The dent in the can today is valuation - I
just cannot find a reasonable basis by which Silgan shares are cheap
today.
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Silgan's Great, But The Price Isn't
Showing posts with label Ball. Show all posts
Showing posts with label Ball. Show all posts
Monday, December 30, 2013
Friday, December 28, 2012
Investopedia: Can Silgan Balance Ongoing Returns Of Capital With Building For The Future?
It's hard to argue that Silgan (Nasdaq:SLGN) doesn't have a very attractive business with pretty significant barriers to entry.
Silgan has a better than 50% share in North American can markets, and
likewise substantial share in its closures business. What's more, other
competitors like Ball (NYSE:BLL), Crown Holdings (NYSE:CCK) and Berry Plastics (NYSE:BERY)
tend towards the rational when it comes to pricing. Couple that with a
strong emphasis on returning capital to shareholders (with dividends and
buybacks), and you have what looks like a strong company.
The question with Silgan, though, is the extent to which it can adapt with the times. As food producers have switched from glass to plastic, I expect the same to happen over time with metal. While Silgan can offset some of that with expansion into emerging markets, I have to ask whether the company also needs to grow beyond metal cans to maintain its long-term earnings power.
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The question with Silgan, though, is the extent to which it can adapt with the times. As food producers have switched from glass to plastic, I expect the same to happen over time with metal. While Silgan can offset some of that with expansion into emerging markets, I have to ask whether the company also needs to grow beyond metal cans to maintain its long-term earnings power.
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Wednesday, October 10, 2012
Investopedia: Alcoa Is A Potential Value Call
Alcoa (NYSE:AA)
is looking like a pretty good example of a company that is doing a lot
of the right things internally, but can't make much objective progress
in the face of significant industry and economic headwinds. Alcoa seems
better positioned than Noranda (NYSE:NOR), Century Aluminum (Nasdaq:CENX) or Rio Tinto (NYSE:RIO),
and the stock is trading below historical forward multiples, but it
seems hard to imagine the stock really moving until aluminum prices
improve.
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Continue reading here:
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Wednesday, February 29, 2012
Investopedia: Wait For Silgan To Get A Little Cheaper
The trouble with consistent performance is that you can't really justify paying a little extra for a stock with the idea that outperformance will redeem that premium over time. Silgan (Nasdaq:SLGN) is definitely one of the best-run packaging companies out there, but it's a stock that pretty much has to be bought right to work out. Consequently, while Silgan is a good name to follow right now, investors new to the name should hold out for a better price before taking the leap.
Business More or Less OK
Although the fourth quarter highlighted some issues in unit volume growth and margins in the plastics business, business at Silgan is more or less going as expected.
Read more here:
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Business More or Less OK
Although the fourth quarter highlighted some issues in unit volume growth and margins in the plastics business, business at Silgan is more or less going as expected.
Read more here:
http://stocks.investopedia.
Wednesday, July 13, 2011
Investopedia: Things Should Get Better For Alcoa
Aluminum may not get the same highfalutin title as copper ("Dr. Copper"), but it is nevertheless a resource with a price that is highly sensitive to economic conditions. With the economy starting to stumble and stagger during the past quarter, perhaps it is no surprise that the stock of aluminum giant Alcoa (NYSE:AA) has gone nowhere fast. Still, Alcoa's core markets are holding up well, and patient investors may yet see this investment work out.
A Mixed Bag in the Second Quarter
As seems to be so common these days, quarterly results here were a mixed bag. Alcoa did alright on the top line, with revenue up 11% sequentially on 6% expansion in pricing. Packaging, building and transportation markets were up by double-digit percentages, while growth in industrial, aerospace, turbine and auto demand was more modest.
Margins saw some pressure, though, as currency, electricity, oil and other material costs pressured results. Still, adjusted EBITDA looked strong, and reported income from continuing operations was still positive on a sequential basis. (For related reading, see Using Base Metals As An Economic Indicator.)
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A Mixed Bag in the Second Quarter
As seems to be so common these days, quarterly results here were a mixed bag. Alcoa did alright on the top line, with revenue up 11% sequentially on 6% expansion in pricing. Packaging, building and transportation markets were up by double-digit percentages, while growth in industrial, aerospace, turbine and auto demand was more modest.
Margins saw some pressure, though, as currency, electricity, oil and other material costs pressured results. Still, adjusted EBITDA looked strong, and reported income from continuing operations was still positive on a sequential basis. (For related reading, see Using Base Metals As An Economic Indicator.)
Continue reading at the link below:
http://stocks.investopedia.
Monday, June 20, 2011
Investopedia: Silgan Sees A Good Deal Crumple
Investors had many good reasons to be enthusiastic about Silgan's (Nasdaq:SLGN) announced merger with Graham Packaging (NYSE:GRM). Not only was the company in place to benefit from significant operating synergies and tax benefits, Graham would have given the company an invaluable plastics packaging business - an increasingly important consideration in a world that seems to be moving away from Silgan's traditional metal packaging.
Unfortunately, Silgan was not the only company to see value in Graham's assets. New Zealand-based Reynolds Group Holdings came in near the eleventh hour and made a counter-offer that Graham's board could not refuse.
The New Deal
Graham informed Silgan and the market that another bidder had emerged and offered $25 in cash for each share of Graham Packaging. That was a significant improvement over the deal Silgan offered - a deal that had been worth about $19.56 at the time of the agreement, but one that incorporated a significant Silgan equity component (meaning that the actual deal value changed every day with Silgan's share price). On a fair like-for-like basis and considering Silgan's share price, Reynolds' offer was ultimately about 14% better and had the added benefit of being an all-cash deal.
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Unfortunately, Silgan was not the only company to see value in Graham's assets. New Zealand-based Reynolds Group Holdings came in near the eleventh hour and made a counter-offer that Graham's board could not refuse.
The New Deal
Graham informed Silgan and the market that another bidder had emerged and offered $25 in cash for each share of Graham Packaging. That was a significant improvement over the deal Silgan offered - a deal that had been worth about $19.56 at the time of the agreement, but one that incorporated a significant Silgan equity component (meaning that the actual deal value changed every day with Silgan's share price). On a fair like-for-like basis and considering Silgan's share price, Reynolds' offer was ultimately about 14% better and had the added benefit of being an all-cash deal.
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Thursday, April 14, 2011
Investopedia: Silgan Packs Away Another Deal
Investors likely don't give much of a thought to packaging companies, unless it is to consider the ramifications of scare-stories like the presence of bisphenol A (BPA) in food cans. After all, this is just a commodity business with low growth potential, right?
Well, maybe not. It's absolutely true that packaging is not exciting from a growth perspective, but there is a lot to be said for an industry with customer-supplier relationships measured in decades of years, consistent margins and cash flow and consolidation potential. With that in mind, the deal between Silgan (Nasdaq:SLGN) and Graham Packaging (NYSE:GRM) becomes a little more interesting.
Please read the full piece:
http://stocks.investopedia.
Well, maybe not. It's absolutely true that packaging is not exciting from a growth perspective, but there is a lot to be said for an industry with customer-supplier relationships measured in decades of years, consistent margins and cash flow and consolidation potential. With that in mind, the deal between Silgan (Nasdaq:SLGN) and Graham Packaging (NYSE:GRM) becomes a little more interesting.
Terms of the Deal
Silgan has long been an active acquirer, doing over 25 deals in the last 25 years, but Wednesday's deal for Graham is a whopper by past standards. Silgan is acquiring this plastic packaging specialist in a deal worth $4.1 billion based upon the pre-deal values of the respective stocks.
Silgan is paying considerations valued at $19.56 per share (again, based on Tuesday's closing prices), a 17% premium to Graham's prior close. Silgan is offering shareholders a mix of compensation - $4.75 in straight-up cash and 0.402 shares of Silgan stock. Because of that sizable chunk of stock, the real value of the deal is going to move around prior to the close of the deal. (For more, see Mergers And Acquisitions: Understanding Takeovers.)
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Friday, October 8, 2010
Will The Market Show Faith In An Aluminum Recovery?
In the metals market today, details matter. Iron ore giant Vale (Nasdaq:VALE) is near a 52-week high, as are major gold producers like AngloGold Ashanti (NYSE:AU) and Newmont Mining (NYSE:NEM); copper companies like Freeport-McMoRan (NYSE:FCX); and diversified mining giants like Rio Tinto (NYSE:RTP). (For background reading, see A Beginner's Guide To Precious Metals.)
Unfortunately, Aluminum companies are not feeling the love. Spot prices on the London Metal Exchange have recovered nicely from early summer lows, but aluminum giant Alcoa (NYSE:AA) is trading closer to the bottom of its range than the top. Will solid third-quarter results and improving underlying trends start a new move up in the stock, or will Wall Street stay in a "show me" mode a while longer?
Please click below to continue on to the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Will-The-Market-Show-Faith-In-An-Aluminum-Recovery-AA-VALE-AU-NEM-FCX-RTP-BA1008.aspx
Unfortunately, Aluminum companies are not feeling the love. Spot prices on the London Metal Exchange have recovered nicely from early summer lows, but aluminum giant Alcoa (NYSE:AA) is trading closer to the bottom of its range than the top. Will solid third-quarter results and improving underlying trends start a new move up in the stock, or will Wall Street stay in a "show me" mode a while longer?
Please click below to continue on to the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Will-The-Market-Show-Faith-In-An-Aluminum-Recovery-AA-VALE-AU-NEM-FCX-RTP-BA1008.aspx
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