The packaging industry has faced various challenges in the last year. However, the industry is positioned for future growth as consumer spending increases. Therefore, fundamentally strong packaging stocks Berry Global Group, Inc. (BERY), AptarGroup, Inc. (ATR), and Greif, Inc. (GEF) could be worth watching.
The packaging industry benefits from strong demand for food, beverage, and hygiene products, as packaging is essential to their distribution. Growing e-commerce and rising demand for sustainable and eco-friendly packaging choices due to increasing environmental concerns should benefit the industry. The industrial packaging market is expected to grow at a 7.3% CAGR until 2035.
The future of packaging is predicted to see service providers focus on sustainability, design, production, and operations to deliver a full-spectrum shopping experience. Technological advancements are bringing a new era in the industry, fusing technology with packaging and altering traditional cardboard boxes, bags, and bottles.
In addition, the smart packaging market is predicted to grow at a 5.8% CAGR until 2028. Consumers can have a snack and a hot beverage thanks to self-heating food packaging innovations.
Take a detailed look at the stocks mentioned above:
Berry Global Group, Inc. (BERY)
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.
BERY’s forward Price/Sales multiple of 0.57 is 49.4% lower than the industry average of 1.13. Its forward EV/Sales multiple of 1.29 is 14.2% lower than the industry average of 1.50.
BERY’s trailing-12-month ROCE of 21.77% is 103.8% higher than the industry average of 10.68%. Its trailing-12-month levered FCF margin of 6.27% is 76.6% higher than the industry average of 3.55%.
BERY’s current liabilities, excluding current debt, came in at $2.31 billion for the period that ended April 1, 2023, compared to $2.83 billion for the period that ended October 1, 2022. Its total liabilities and stockholders’ equity came in at $16.61 billion, compared to $16.96 billion for the same period.
The consensus revenue estimate of $13.68 billion for the year ending September 2024 represents a 3.7% increase year-over-year. Its EPS is expected to grow 11.2% year-over-year to $8.29 for the same period. It surpassed EPS estimates in all four trailing quarters. BERY’s shares have gained 29.7% over the past nine months to close the last trading session at $63.49.
BERY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
BERY has a B grade for Value and Growth. Within the B-rated Industrial - Packaging industry, it is ranked #6 out of 22 stocks. Click here for the additional POWR Ratings for Momentum, Sentiment, Stability, and Quality for BERY.
AptarGroup, Inc. (ATR)
ATR designs and manufactures a range of drug delivery, consumer product dispensing, and active material science solutions and services for the pharmaceutical, beauty, personal care, home care, and food and beverage markets. The company operates through three segments: Aptar Pharma; Aptar Beauty; and Aptar Closures.
ATR’s trailing-12-month levered FCF margin of 5.22% is 47% higher than the 3.55% industry average, while its trailing-12-month CAPEX / Sales of 9.44% is 50.9% higher than the industry average of 6.26%.
During the fiscal first quarter that ended March 31, 2023, ATR’s net sales increased marginally year-over-year to $860.07 million. Also, its current assets came in at $1.48 billion for the period that ended March 31, 2023, compared to $1.43 billion for the period that ended December 31, 2022. Its total assets came in at $4.30 billion, compared to $4.20 billion for the same period.
Street expects ATR’s revenue to increase 5.2% year-over-year to $3.50 billion for the year ending December 2023. Its EPS is expected to grow 11.5% year-over-year to $4.22 for the same period. It surpassed EPS estimates in three of four trailing quarters. Over the past nine months, the stock has gained 15% to close the last trading session at $112.94.
It’s no surprise that ATR has an overall B rating, equating to a Buy in our POWR Ratings system. It has an A grade for Stability and Sentiment and a B grade for Growth and Quality. It is ranked #5 in the same industry.
Beyond what is stated above, we’ve also rated ATR for Value and Momentum. Get all ATR ratings here.
Greif, Inc. (GEF)
GEF engages in the production and sale of industrial packaging products and services worldwide. It operates through three segments: Global Industrial Packaging; Paper Packaging & Services; and Land Management.
GEF’s forward EV/Sales of 1.10x is 26.9% lower than the industry average of 1.50x. Its forward Price/Sales of 0.59x is 47.6% lower than the industry average of 1.13x.
GEF’s trailing-12-month ROCE of 24.81% is 132.3% higher than the industry average of 10.68%. Its trailing-12-month levered FCF margin of 7.77% is 118.6% higher than the industry average of 3.55%.
GEF’s current liabilities came in at $937.4 million for the period that ended April 30, 2023, compared to $1.05 billion for the period that ended October 31, 2022. Its total assets came in at $5.91 billion, compared to $5.47 billion for the same period.
Analysts expect GEF’s revenue to increase 2.5% year-over-year to $5.52 billion for the year ending October 2024. Its EPS is expected to come in at $5.71 for the same period. The stock has gained 10.1% over the past year to close the last trading session at $68.34.
GEF’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.
It is ranked #4 in the same industry. It has a B grade for Value, Sentiment, and Quality. To see additional GEF’s ratings for Growth, Momentum, and Stability, click here.
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BERY shares were trading at $62.66 per share on Thursday morning, down $0.83 (-1.31%). Year-to-date, BERY has gained 4.56%, versus a 15.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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