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AptarGroup (ATR) Tops Earnings, Sales Estimates in Q3

AptarGroup, Inc. ATR reported third-quarter 2017 earnings per share of 83 cents. Earnings beat the Zacks Consensus Estimate of 80 cents. The figure came within the company’s guidance range of 77-97 cents per share.

Operational Update

Total revenues climbed 6% year over year to $624.3 million in the reported quarter driven by 3% core growth and a 3% favorable impact from exchange rates. It also beat the Zacks Consensus Estimate of $604 million.

Cost of sales increased to $408 million from $381 million recorded in the year-ago quarter. Gross profit rose 3.5% year over year to $216 million, with gross margin contracting 40 basis points (bps) to 35%. Selling, research, development and administrative expenses flared up 10.4% year over year to $95.7 million. Adjusted operating income dropped 7.3% year over year to $69.5 million. AptarGroup’s operating margin contracted 160 bps year over year to 11.1%.

Segmental Performance

Total revenues in the Beauty and Homes segment were up 5.6% year over year to $333.7 million. Operating income dipped 14% to $21.8 million from $25.4 million reported in the year-ago quarter.

Total revenues in the Pharma segment went up 4.3% year over year to $199.5 million. Operating income inched up 0.7% year over year to $55.4 million in the third quarter.

Total revenues in the Food and Beverage segment rose 10.3% year over year to $91 million. Operating income declined 15.8% year over year to $11.7 million.

Financial Performance

AptarGroup reported cash and cash equivalents of $1,019 million at the end of the third quarter, up from $466 million as of Dec 31, 2016. At quarter end, long-term debt was approximately $1,271.5 million, up from $773 million as of Oct 19, 2017. AptarGroup announced a quarterly cash dividend of 32 cents per share.

Outlook

Looking ahead to the fourth quarter, AptarGroup anticipates revenue growth in each segment. For fourth-quarter 2017, AptarGroup expects earnings to be in the range of 68-73 cents. Comparable earnings per share for the prior-year quarter were approximately 77 cents. The company, however, anticipates certain headwinds to remain, including elevated raw material costs and lower results at its decorative facility.

Share Price Performance

Over the last year, AptarGroup has outperformed the industry with respect to price performance. The stock has gained 21.8%, while the industry registered growth of 19.3%.



Zacks Rank & Key Picks

AptarGroup currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same sector are Barnes Group Inc. B, Nine Dragons Paper (Holdings) Ltd. NDGPY and Lakeland Industries, Inc. LAKE. All three stocks flaunt a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Barnes Group has an expected long-term earnings growth rate of 10%.

Nine Dragons Paper has an expected long-term earnings growth rate of 18%.

Lakeland Industries has an expected long-term earnings growth rate of 10%.

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