Fund management giant BlackRock has been cutting its position in Crown Holdings according to a recent 13F filing. At the same time a number of US money managers have been buying in. Our March screens have identified the stock as an excellent proposition in the US equities space.
Crown Holdings NYSE:CCK is a massive maker of food packaging both for the US market and overseas. It has operations in 40 countries and claims to make one in five of all the beverage cans sold globally. It employs over 26,000 people and has net sales of USD 11.4bn. That’s a pretty hefty footprint.
Here are just a few reasons why BlackRock should have been buying into Crown Holdings stock right now.
Cash rich against its peers
Crown Holdings is still looking relatively cash rich. The management team declared a cash dividend of 24 cents per share.
Secondly, the share price is on the move. We’ve seen some decent moment since November, when it was trading at 68 cents. At time of writing, it is up at 87 cents. Even then, 24 cents per share dividend looks very nice in yield terms. The stock has a 52 week high of 129 cents.
The stock should really be at least a dollar and still looks undervalued compared with historical share price performance. The PE is only around 14x.
Number three: Q4 results looked very impressive. Cash and equivalents were up by 49% – see dividend above.
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Fundamental growth in core areas of packaging
Crown is also still seeing some excellent growth forecasts across many of its key business segments. Beverage cans, just taking one example, are seeing historic levels of growth. Around 75% of new beverage launches in North America now appear in cans. That’s double the rate five years ago.
There is a really fundamental shift underway here: taking just Latin America, in Mexico the market is shifting from returnable glass to cans. In Brazil, the country’s alcohol market continues to see a meaningful transition to beer cans (64% of Brazil’s beer came out of cans in 2022, against 48% in 2015).
Solid performance against its closest peers
Overall we see the company operating in a buoyant sector. It measures up well against the competition though. If you want a better looking balance sheet, you’d have to go seek out Amcor NYSE:AMCR, but Crown holds its own against the likes of Avery Dennison NYSE:AVY or indeed Ball NYSE:BALL. What really stands out for us in the sheer quality of Crown’s balance sheet versus its peers.
According to Bridgewise, which ran some analysis for us on Crown Holdings, cash and cash equivalent metrics suggests that their stock price has room to grow to reflect its actual intrinsic value. The company’s cash and cash equivalents movement, therefore, received a grade of 91/100 from Bridgewise.
Also, Crown’s price to book ratio (P/B) was reported as 5.6 and represents -3.00% change from the previous report. The company’s book value factor metrics are even more remarkable when compared to their peers.
We are also seeing some outstanding numbers from Crown on free cash flow growth and capital expenditure growth. We’re ALSO seeing an amazing 69% change in free cash flow since its previous filing. If you’re a dividend hunter in the US large cap space, this is certainly a stock to keep an eye on.
