On August 3, 2022, Ball Corporation (BALL) stock closed trading at $72.81. The packaging and containers company reported earnings after the bell on the 3rd. BALL’s sales topped expectations but missed the mark for the bottom lines. Second quarter sales were $4.134 billion compared to the forecast of $3.929 billion. Earnings per share (EPS) were predicted to be $0.98 but checked in well below the Zacks’ Consensus at just $0.82 per share. (1)
On the quarterly conference call, Chief Executive Officer (CEO) Daniel Fisher provided investors with some be patient guidance, “While our ability to achieve our long-term diluted earnings per share growth goal of 10% to 15% in 2022 has been impeded by the recent deceleration in volume growth, earnings translation headwinds, ongoing inflation and the pending sale of our Russian business, our earnings, cash flow and EVA trajectories are in very good shape for 2023 and beyond.” (3)
Wall Street was not at all pleased with the results or the CEOs and BALL stock opened $5.91 lower the next day at $66.90 and closed at $59.28 on August 4th, losing 18.6% day over day.
In the aftermath of the disappointing quarter, a slew of analysts downgraded price targets for Ball: (2)
- Mizuho Securities analyst Christopher Parkinson dropped his price target $24, from $98 to $74
- Arun Viswanathan, RBC Capital analyst, cut his price target from $74 to $64
- Truist analyst Michael Roxland slashed his price target from $93 to $61
- Kyle White of Deutsche Bank reduced his outlook to $65 from $81
While Wall Street went decidedly negative, a pair of Ball Corporation insiders headed to the market and bought chunks of BALL stock.
Vice President (VP) Charles Bakes bought 10,000 shares at $57.46 for a total investment of $574,627. Chief Financial Officer (CFO) Scott Morrison took it one comma further, acquiring 17,500 shares at $57.59 for a touch more than $1 million.
Both insiders experienced a change of heart as each primarily sold BALL stock prior to last week’s purchases. VP Baker sold more than $16.3 million in stock while buying just $11,112 dating back to 2004. (4) It’s the same story for CFO Morrison as he sold a little more than $13 million versus a single purchase of $113,050 going back to 2004 as well. (5)
The Ball insiders touched on each C in our 3CP criteria:
- Cluster Buying – two or more insiders buying simultaneously
- Change of Heart – sellers turned buyers
- Commitment – large purchases
Let’s see if their 3Cs can turn into an A investment. As of now, BALL’s earnings forecast for 2023 is $3.77 per share with revenue expected to come in at $16.35 billion. During the last five years, Ball Corporation traded with an average price-to-earnings (P/E) of 25.24 and an average price-to-sales (P/S) ratio of 1.87.
If BALL hits 2023’s earnings estimate and trades with its five-year average P/E, then it would hit $95.15. On the sales side, 1.87 times next year’s revenue forecast of $16.35 billion would price out BALL shares at $97.27. The Street has a one-year price target of $66.12. (7) The packaging and containers company trades at $61.69 as of this keystroke and has a 1.33% annual dividend yield.
Outlook: Ball Corporation (BALL) appears to offer some upside for investors. However, it might take a while as Wall Street has turned negative on the stock. While it is encouraging that a pair of insiders spent a lot of money, BALL is only appropriate for investors with a time horizon of at least 18-24 months.
1 – https://finance.yahoo.com/news/ball-corp-ball-q2-earnings-163104393.html
2 – https://finance.yahoo.com/news/ball-corp-hit-downgrades-price-194444276.html
3 – https://seekingalpha.com/article/4529921-ball-corp-ball-ceo-daniel-fisher-on-q2-2022-results-earnings-call-transcript
4 – https://www.secform4.com/insider-trading/9389.htm
5 – https://www.secform4.com/insider-trading/1205945-5.htm
6 – https://finance.yahoo.com/quote/BALL/analysis?p=BALL
7 – https://finance.yahoo.com/quote/BALL?p=BALL