Yahoo Finance Reasons to Add AptarGroup (ATR) Stock to Your Portfolio
AptarGroup, Inc. ATR is well-poised to gain from demand in its end markets and efforts to expand its business through acquisitions and investment in capacity expansion. Backed by efforts to bring new and innovative products into the market, it remains the preferred choice for renowned brands worldwide which will continue to aid growth.
Let’s delve deeper and analyze the factors that make this Zacks Rank #1 (Strong Buy) stock a compelling investment option at the moment.
Better-Than-Expected Q1 Results: ATR’s first-quarter 2023 total revenues rose 1.8% year over year to $860 million and beat the Zacks Consensus Estimate of $844 million. Core sales, excluding currency and acquisition effects, improved 4% year over year aided by the Pharma and Beauty segments. Adjusted earnings per share were 95 cents, beating the consensus estimate of 90 cents and increasing 2% year over year.
Positive Earnings Surprise History: AptarGroup has a trailing four-quarter earnings surprise of 6.4%.
Upbeat Growth Projections: An uptrend in the Zacks Consensus Estimate for the company’s earnings echoes a positive sentiment. The estimate for 2023 earnings has moved 8% upward over the past 30 days and is pegged at $4.15 per share. It suggests growth of 9.5% from the year-ago reported figure. The consensus mark for fiscal 2024 earnings has also gone up 5% over the past 30 days and stands at $4.57 per share. It indicates a year-over-year improvement of 10%.
ATR has an estimated long-term earnings growth rate of 7%.
Segments Well-Poised for Growth
The Beauty segment is seeing higher sales in both prestige and mass fragrance, along with sales growth of skin care and color cosmetic solutions. The company is investing in building a new state-of-the-art Prestige Custom beauty plant in Oyo, France, which will be operational in the ongoing quarter.
The Pharma segment is witnessing healthy demand for its proprietary dispensing devices used for nasal decongestants, eye care, cough and cold and saline rinses, as well as allergic rhinitis, emergency medicines and depression therapies. Demand for elastomeric components remains strong, including for biologics. To capitalize on this momentum, AptarGroup is expanding its capacity to produce elastomer components for injected medicines and active material science solutions. Also, the FDA approved Narcan for over-the-counter usage recently which is expected to boost the segment’s growth.
Strong Balance Sheet Enables Investment in Business
ATR maintains a strong balance sheet, which enables it to continue to invest in a business and pursue strategic opportunities while continuing to return value to shareholders in the form of dividends and repurchases. In the first quarter of 2023, the company spent $78 million on capital expenditures, the majority of which were in the Pharma segment, including expansions in the United States, France and China. For 2023, the company intends to spend $280-$300 million in capital expenditures. This reflects the additional accelerated investments that AptarGroup will make to increase production capacity for proprietary pharma dispensing devices to meet the rapidly growing demand.
Acquisitions: A Key Growth Strategy
AptarGroup continues to expand its business through acquisitions to expand the scope of technologies, geographic presence and product offerings. In 2022, it acquired Metaphase Design Group Inc., an expert in the ergonomic and industrial design of handheld devices, including medical devices, which is now a part of the Pharma segment.
In March 2023, AptarGroup completed the acquisition of France-based iD SCENT, which is considered an expert in paper fragrance sampling solutions. The company also completed the acquisition of 80% of the equity interest of Bahrain-based Gulf Closures W.L.L., which manufactures closures for beverage products.
Customers Favor ATR’s Innovative Solutions
AptarGroup continues to introduce innovative products and has thus been the packaging solution partner for renowned brands in pharma, beauty, personal care and home care markets. Its nasal spray pumps have been featured on a growing number of allergy medications, with notable new launches recently in Latin America and Europe. The proprietary ophthalmic squeeze dispenser continues to drive growth and has been featured in several launches in Europe, including Ocutears Hydro+ by Santen and in Brazil, Viofta by EMS.
In the Beauty segment, AptarGroup’s spray pumps continue to be chosen as the dispensing solution for several new fragrances by renowned brands. The dispensing pump is now part of the Revlon Illuminance foundation in North America. Star Drop, which ensures precise dispensing, is being used for a new skincare product in China. The company’s mono-material fully recyclable pump continues to be featured on new products. In the Closures segment, the custom inverted closure with a self-sealing flow control valve has been chosen as the dispensing solution for the launch of another inverted dish soap brand.
Price Performance
Shares of AptarGroup have gained 8.1% in the past year against the industry’s 9.1% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. WOR, The Manitowoc Company, Inc. MTW and Pentair plc PNR. WOR and MTW sport a Zacks Rank of 1 at present, while PNR has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Worthington Industries has an average trailing four-quarter earnings surprise of 27.5%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $4.93 per share, up 17.7% in the past 60 days. WOR has gained 27.8% in the past year.
Manitowoc has an average trailing four-quarter earnings surprise of 38.8%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at 85 cents per share, up 63.5% in the past 60 days. MTW’s shares have gained 20.8% in the past year.
The Zacks Consensus Estimate for Pentair’s 2023 earnings per share is pegged at $3.66, up 3% in the past 60 days. It has a trailing four-quarter average earnings surprise of 7.2%. PNR has gained 14.9% in the past year.
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