Ball Corp. (NYSE:BLL) posted third-quarter net earnings attributable to the corporation of $115.1 million versus $132.1 million a year earlier. Sales in the quarter were $2.28 billion compared to $2.26 billion a year ago.
The Chief Executive Officer John Hayes said the company is focused on cost optimization and growth opportunities that will drive future performance and continued strong free cash flow. The company remains on track to deliver full-year diluted earnings per share growth of 10 to 15 percent.
Ball's quarterly profits have been adversely impacted by restructuring costs and expenses to further expand its footprint internationally, where revenue growth has been the strongest.
Earlier this month, Ball agreed to acquire Envases del Plata SA and to form a joint venture with the aluminum aerosol packaging producer in Argentina that will combine operations in that country with those in Brazil. Ball has billed the acquisition of Envases, which has a plant in Mexico, as providing a platform to grow its North American extruded aluminum packaging business.
Gross margin widened to 18.2% from 17.5%.
The company's main metal beverage packaging segment for Asia and Americas reported 3.9% higher sales, while sales in the Europe-based metal beverage packaging segment fell 4.3%. Meanwhile, Ball's aerospace and technologies segment saw revenue rise 5.5%, and sales of metal food and household packaging in the Americas fell 2.4%.
Financial Performance & Position
Revenue increased from $7.39 billion in 2007 to $8.63 billion in 2011. Net income increased from $281 million to $444 million. The net profit margin in 2011 was 5.1 percent. Revenue this year is on pace to be roughly flat compared to last year.
Ball reported cash of $123.5 million at the end of the second quarter. The current ratio is roughly 3. A large portion of Ball's assets are in plant, property and equipment and goodwill. The firm has $3.5 billion of debt. Total equity has been trending lower.
The short-term multiplier model valuations suggest the firm is overvalued. The absolute values of the multiplier model valuations suggest the fairly valued to undervalued. The price-sales ratio is 0.75 and the price-earnings ratio is 15.5.
The financial performance and position are good. The short-term multiplier model valuations are near peaks and investors should scale back positions and use a substantial decline in value to accumulate common equity shares of Ball Corp.
Disclaimer: This article is not meant to establish or continue an investment advisory relationship. Before investing, readers should consult their financial advisor. Christopher Grosvenor does not know your financial situation and ability to bear risk and thus his opinions may not be suitable for all investors.
Disclosure: I am short SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.