On Monday, CFRA made an adjustment to Ball Corp 's (NYSE:BALL) financial outlook. The firm's analyst lowered the 12-month stock price target to $78 from $89 while maintaining a Strong Buy rating on the stock.
The new target reflects a 22.9 times multiple on the projected 2024 earnings per share (EPS), which is above Ball Corp's three-year average forward price-to-earnings (P/E) ratio of 19.6 times. This premium is justified by an anticipated increase in demand for aluminum cans after a period of reducing inventory levels.
The analyst has also revised upwards the EPS estimates for the coming years, with a $0.14 increase for 2024, bringing the expected EPS to $3.40, and a $0.19 rise for 2025, forecasting an EPS of $3.85.
The optimism stems from a belief that the negative impact on earnings from the recent sale of Ball Corp's aerospace division will be counterbalanced by strategic share buybacks and a reduction in interest expenses.
Ball Corp is planning to allocate approximately $2 billion from the aerospace division sale proceeds toward debt reduction and another $2 billion for a share repurchase program. This strategic move is anticipated to sharpen the company's focus on its core business of beverage cans and is expected to bolster its free cash flow.
Capital expenditures for Ball Corp are projected to decrease to about $600 million in both 2024 and 2025, a significant drop from the $1 billion in 2023 and $1.7 billion spent in the prior two years.
InvestingPro Insights
In light of CFRA's updated financial outlook for Ball Corp, real-time data from InvestingPro further enriches the narrative. Ball Corp's market capitalization stands at $21.23 billion, with a P/E ratio of 25.74 based on the last twelve months as of Q4 2023. This valuation reflects the company's strong market position, albeit at a high earnings multiple, which aligns with CFRA's assessment of the stock trading at a premium.
InvestingPro Tips indicate that Ball Corp's stock is currently in overbought territory according to the RSI, and it has been trading near its 52-week high, with a price 99.28% of the peak. This suggests that investor sentiment has been bullish, supported by a robust return of 17.48% over the last three months. Moreover, the company has a commendable track record of maintaining dividend payments for 52 consecutive years, which may be attractive to income-focused investors.
For readers interested in a deeper analysis, more InvestingPro Tips can be found on the Ball Corp page at Investing.com. To access these tips and more, use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 11 additional tips available on InvestingPro that can provide further insights into Ball Corp's financial health and stock performance.
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