Reasons to Add Sealed Air (SEE) Stock to Your Portfolio Now

Sealed Air Corporation SEE has emerged as a lucrative option, of late, backed by strong second-quarter results, upbeat 2019 outlook, impressive surprise trend, and expected benefits from its focus on the Reinvent SEE Strategy and restructuring actions. Further, growth in fresh food and e-commerce market bolstered the company’s prospects.

Sealed Air carries a Zacks Rank #2 (Buy), at present. It has a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum. The company’s score is a weighted combination of these three scores. Such a score allows you to eliminate the negative aspects of stocks and select winners. In fact, our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1(Strong Buy) or 2, make solid investment choices.

Let's delve deeper into the factors that make Sealed Air stock a compelling investment option at the moment.

An Outperformer: Shares of Sealed Air have gained 13.9% over the past year, against the industry’s decline of 31.5%.

 

Strong Q1 Results: Sealed Air delivered second-quarter 2019 adjusted earnings per share of 80 cents, surpassing the Zacks Consensus Estimate of 64 cents and improving 25% year over year. Results can be attributed to strong execution of the company’s Reinvent SEE strategy, which was introduced in December 2018 to drive growth and earnings power.

Upbeat 2019 Guidance:  The company anticipates net sales at around $4.85 billion for fiscal 2019, which reflects year-over-year growth of approximately 2% on reported basis and 5% in constant dollars. Adjusted EBITDA is estimated to lie between $950 million and $960 million. Sealed Air’s adjusted EBITDA in fiscal 2019 stood at $890 million. The company projects adjusted earnings per share at $2.70-$2.80. The company had reported earnings per share of $2.50 in fiscal 2018.

Growth Projections: The Zacks Consensus Estimate for fiscal 2019 and fiscal 2020 for Sealed Air have moved up 1% and 2%, respectively, over the past seven days, reflecting brokers’ confidence in the stock. The Zacks Consensus Estimate for current-year earnings per share is pegged at $2.77, representing year-over-year improvement of 10.80%. For 2020, the consensus estimate for earnings per share stands at $3.06, suggesting year-over-year growth of 10.61%.

The stock also has a long-term expected earnings per share growth rate of roughly 8.64%.

Positive Earnings Surprise History: Sealed Air has an impressive earnings surprise history. It has outpaced the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 8.27%.

Return on Assets (ROA): Sealed Air currently has a ROA of 8.5%, while the industry's ROA is 6.3%. An above-average ROA denotes that the company is generating earnings by effectively managing assets.

Reinvent SEE Strategy To Drive Earnings

In December 2018, Sealed Air announced a reformation plan — Reinvent SEE Strategy — and a fresh restructuring program, in a move to drive growth and earnings. The new strategy is focused on innovations, SG&A productivity, product-cost efficiency, channel optimization and customer-service enhancements. One of most vital aspects of this strategy involves investment in technology and resources focusing on new and existing high-growth markets.

The new strategy will fuel Sealed Air’s growth by supporting packaging innovations for fresh food and e-commerce, and increasing operating leverage target above 40% per year, beginning in 2019. The Reinvent SEE Strategy and the company’s ongoing restructuring program are likely to result in total annualized savings of $240-$260 million from 2019 through 2021.

Other Catalysts

Sealed Air’s growth will be supported by higher demand for its core product portfolio and recently-introduced innovations.  The company is witnessing increased demand for essential and high-performing packaging solutions that extend shelf life, reduce waste and drive customer productivity. Moreover, acquisitions to expand geographic presence and product offerings will help sustain growth.

Other Stocks to Consider

Some other top-ranked stocks in the Industrial Products sector are Unifirst Corporation UNF, Albany International Corporation AIN and Cintas Corporation CTAS. While Unifirst flaunts a Zacks Rank #1 (Strong Buy), Albany International and Cintas carry a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Unifirst has a projected earnings growth rate of 15.17% for the current year. The stock has gained 4% in a year’s time.

Albany International has an estimated earnings growth rate of 32.3% for 2019. The company’s shares have gained 10% in the past year.

Cintas Corporation has an expected earnings growth rate of 11.15% for the ongoing year. The stock has appreciated 25% over the past year.

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