In this article I’ll be taking a look at Crown Holdings NYSE:CCK the US metal packaging company founded in 1892 and headquartered in Yardley, Pennsylvania.
Crown Holdings: the technical view
From a technical perspective, there are three notable observations. Firstly, there has been a breakout above the 200-day moving average (200 MA). This breakout is a significant technical event, as it indicates a potential shift in the long-term trend. It suggests that the price has surpassed a key resistance level and could potentially lead to further upward momentum.
Secondly, a triple bottom pattern has formed. This pattern occurs when the price reaches a certain level of support three times before bouncing higher. The triple bottom pattern is often seen as a bullish reversal pattern, indicating a potential trend reversal from a downtrend to an uptrend. Traders and investors may see this pattern as a signal to enter bullish positions.
Additionally, there has been a rejection of the 6.18% Fibonacci retracement level. Fibonacci retracement levels are commonly used to identify potential levels of support and resistance. The rejection of the 6.18% retracement level suggests that there is significant buying interest at that level, reinforcing its importance as a support level.
Considering these technical factors, the market has witnessed a breakout above the 200 MA, a formation of a triple bottom pattern, and a rejection of the 6.18% Fibonacci retracement level. These patterns and rejections indicate potential bullish momentum, providing traders and investors with valuable signals to consider for potential trading opportunities.
The Fundamental view
When analysing the fundamentals of the company, there are five positive and negative factors to consider.
On the positive side, the stock is currently trading at a 17% discount to the estimated fair value. This suggests that the market may be undervaluing the stock, potentially presenting an attractive investment opportunity for investors looking for bargains.
Additionally, earnings are forecasted to grow at a rate of 11% per year. This positive growth projection indicates the company’s ability to increase its profitability over time, which can be a positive sign for investors.
Furthermore, the company has achieved profitability this year, which is a significant milestone. This demonstrates the company’s ability to generate earnings and create value for shareholders, indicating a positive trajectory for its financial performance.
However, there are also negative factors to consider. One such concern is that the company’s debt is not well covered by operating cash flow. This raises questions about the company’s ability to manage its debt obligations and may indicate financial strain.
Additionally, there has been significant insider selling over the past three months. Insider selling can sometimes be viewed as a lack of confidence by those within the company, and it may signal potential challenges or concerns about the company’s future prospects.
In summary, while the company shows positive aspects such as a discounted valuation, projected earnings growth, and achieving profitability, it is important to carefully assess the risks associated with the company’s debt coverage and insider selling.
Piers Etson is a trading coach with Bullseye Academy which delivers comprehensive and accredited education programmes with a focus on Finance, Investments, Wealth Management, and Future Planning. Our mission: To help shape the next generation of financial professionals through innovation, expertise, and an unwavering determination in delivering success.
