Ball Corp (BALL, Financial) has recently experienced a daily gain of 2.9% and a three-month gain of 2.05%. With an Earnings Per Share (EPS) of 2.52, the question arises: is the stock significantly undervalued? This article aims to present a detailed valuation analysis of Ball Corp (BALL) to answer this question. We invite you to read on for a comprehensive understanding of the company's financial status and potential.
Company Introduction
Ball Corp (BALL, Financial) is the world's leading metal can manufacturer, boasting a market share of over 40% in its three main regions: North America, Europe, and South America. The company's focus is on increasing capacity to meet the surge in demand from developed markets while also investing in rapidly growing emerging-market economies. Ball Corp (BALL) also maintains a small presence in the U.S. defense industry through its aerospace segment.
With its current price of $56.09 per share, Ball Corp (BALL, Financial) has a market cap of $17.70 billion. The stock appears to be significantly undervalued when compared to its GF Value of $101.5, indicating potential for high future returns.
Understanding GF Value
The GF Value is our proprietary measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded.
According to our valuation method, Ball Corp (BALL, Financial) is significantly undervalued. This suggests that the long-term return of its stock is likely to be much higher than its business growth, making it a potentially lucrative investment opportunity.
Link: Discover companies that may deliver higher future returns at reduced risk.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. Ball's cash-to-debt ratio of 0.09 ranks worse than 78.98% of companies in the Packaging & Containers industry, indicating that its financial strength is relatively weak.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is generally less risky. Ball has been profitable for 10 out of the past 10 years, indicating strong profitability. Additionally, the company's 3-year average annual revenue growth rate of 12.4% ranks better than 74.07% of companies in the Packaging & Containers industry, indicating impressive growth.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. Ball's ROIC of 6.42 over the past 12 months is lower than its WACC of 8.01, suggesting that the company is not creating value for shareholders.
Conclusion
In conclusion, Ball Corp (BALL, Financial) appears to be significantly undervalued. While the company's financial condition is poor, its profitability is strong and its growth ranks better than 53.17% of companies in the Packaging & Containers industry. For more information about Ball stock, you can check out its 30-Year Financials here.
To find high-quality companies that may deliver above-average returns, please check out our High Quality Low Capex Screener.
