Aptargroup Inc - Growth & Income

Aptargroup (ATR) recently announced second quarter earnings per share growth of 63%. It was 4 cents above the Zacks Consensus Estimate, and its seventh consecutive positive surprise.

Aptargroup supplies pumps, dispensers, closures, and valves for a variety of markets around the globe. Over half of the company's sales come from Europe.

Aptargroup is based in Crystal Lake, Illinois and has a market cap of $2.97 billion.

Strong Sales & Income Growth

Aptargroup reported second quarter earnings per share of $0.67, compared to $0.41 in the second quarter of 2009. Overall net sales increased 19% over the same period as the company continued to see strong demand across each business segment. Sales for the quarter were divided as follows:

Beauty & Home: 50.4%

Closures: 28.1%

Pharma: 21.4%

The Beauty & Home segment experienced revenue growth of 23% from the second quarter of 2009, while the Closures segment increased 19%. The Pharma segment, which is Aptargroup's most profitable, saw modest sales growth of 8%.

Positive Outlook

Management has increased capital expenditures for the remainder of 2010 as it is optimistic about a continued recovery in the markets it serves.

Management gave earnings per share guidance for the third quarter of $0.61 to $0.66. The Zacks Consensus Estimate is at the high-end of that range at $0.66. Aptargroup reports third quarter results on October 13.

The consensus 2010 EPS estimate is currently $2.51, representing 35% growth year-over-year. The 2011 estimate is $2.70 per share.

Rewarding Shareholders

Aptargroup's low debt levels and strong cash flow have allowed it to internally fund its capital expenditures, raise its dividend and buy back shares.

The company recently raised its dividend 20% to $0.72 per share. Aptargroup also repurchased approximately 600,000 shares during the second quarter as part of the share repurchase program announced in July 2008. There is no expiration date for the program, and 2.9 million shares remain authorized for repurchase.

Fundamentals

The stock trades at 2.6x book value, a premium to the industry average of 1.7x. This premium is justified given its above-average profitability margins and low debt. It trades at 17.9x 2010 earnings.

Aptargroup has a dividend yield of 1.6% and is a Zacks #2 Rank (buy) stock.
 
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