AMBP Stock: 14%-Yielder Ideal for Contrarian Investors
February 3, 2025
Ardagh Metal Stock Outlook Bullish on Strong Results
When it comes right down to it, packaging is probably not something most people think of on a regular basis. But, when it comes to selling products, a business needs to be able to capture the attention of consumers. And it’s also important what happens to that packaging after it gets used. These are two important dynamics at which Ardagh Metal Packaging SA (NYSE:AMBP) is an expert.
In 2024, the food and beverage metal cans market was estimated to be worth $50.42 billion. And it’s projected to hit $70.72 billion by 2029, expanding at a compound annual growth rate (CAGR) of seven percent. (Source: “Food and Beverage Metal Cans Market,” MarketsAndMarkets.com, last accessed January 21, 2025.)
Meanwhile, a significant amount of metal, including packaging, ends up in landfills, despite the high value of scrap metal. That’s where Ardagh Metal comes in, with a solution.
The Europe-based company is a leading global supplier of infinitely recyclable, sustainable metal beverage cans and ends to brand owners. It operates 23 production facilities in nine countries.
A subsidiary of sustainable packaging business Ardagh Group, Ardagh Metal Packaging is a leading industry player, with the #2 market position in Europe and #3 share in North America and Brazil. It also holds the #2 position in the global glass industry. (Source: “Investor Factsheet,” Ardagh Metal Packaging SA, last accessed January 21, 2025.)
Ardagh Metal has annual sales of approximately $5.0 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $600.0 million.
The company’s customers are made up of a wide variety of leading beverage producers serving categories such as beer, carbonated soft drinks, energy drinks, hard seltzers, juices, pre-mixed cocktails, teas, sparkling waters, and wine.
Because it helps protect, transport, and preserve products in virtually every sector, Ardagh’s products are in demand throughout the economic cycle.
A Strong Q3 Business Performance
For the third quarter ended September 30, 2024, Ardagh Metal Packaging announced that revenue inched up one percent to $1.31 billion from $1.29 billion. Its global beverage can shipments grew by two percent, benefitting from the increase of new capacity and strong growth in the energy drinks category. (Source: “Third Quarter 2024 Results,” Ardagh Metal Packaging SA, October 24, 2024.)
The company’s adjusted EBITDA were up 15% at $196.0 million, net income increased 5.8% to $18.0 million, or $0.02 per share, and adjusted earnings were up 33.3%, at $0.08 per share.
Ardagh ended the quarter with a strong liquidity position of $700.0 million. Net cash and inflows in the fourth quarter are expected to boost its total liquidity to roughly $1.0 billion.
Commenting on the third-quarter results, the company’s chief executive officer, Oliver Graham, said, “Our strong business performance in the quarter delivered double-digit Adjusted EBITDA growth, ahead of guidance. Growth in the quarter was driven by favorable volume/mix, higher input cost recovery and lower operating costs.”
“Our outperformance through the year versus initial expectations, particularly in Europe, gives us the confidence to further improve our full year guidance for Adjusted EBITDA to $650-660 million.”
Looking ahead, Ardagh Metal Packaging increased its guidance; it now expects to report:
- Fourth-quarter adjusted EBITDA in the range of $142.0 million to $152.0 million, compared to $148.0 million in the fourth quarter of 2023
- 2024 adjusted EBITDA in the range of $650.0 million to $660.0 million, up from its previous guidance range of $640.0 million to $660.0 million, which was an improvement from its previous guidance of $630.0 million to $660.0 million
Declares Quarterly Dividend of $0.10 Per Share
AMBP stock only went public in August 2021 and began paying a dividend in 2022, so it doesn’t yet have a long dividend history. But, Ardagh Metal Packaging has paid a quarterly dividend of $0.10 per share for more than two years.
In December, AMBP stock paid a fourth quarter dividend of $0.10 per share, or $0.40 on an annual basis, for a forward dividend yield of 14.29%. (Source: “Ardagh Metal Packaging S.A. Declares Quarterly Dividend,” Ardagh Metal Packaging SA, October 24, 2024.)
AMBP Stock in the Red, But There’s 41% Potential Upside
Despite Ardagh Metal Packaging reporting strong quarterly results and improved guidance, AMBP stock has taken a hit. As of January 21, it is down 5.8% year to date and 13.5% on an annual basis. Despite being in the red, the outlook for AMBP stock, at least according to conservative Wall Street, remains robust, with analysts providing a 12-month share price target range of $3.28 to $4.00 per share. This points to potential upside of up to 41.3% with AMBP stock.
Chart courtesy of StockCharts.com
The Lowdown on AMBP Stock
Ardagh Metal Packaging is a pure-play, listed beverage can producer with a big market share in Europe, North America, and Brazil.
After a year of transition in 2023, the company has been reporting solid results in 2024, and it has improved its balance sheet and 2024 adjusted EBITDA guidance and shipment growth.
This optimism comes on the back of the resilience in beverage consumption across Ardagh’s markets, a trend it believes will continue to outperform other packaging types.
That’s good news for the whopping 76.05% of all shares held by insiders. Big insider holdings are a positive sign, and they should encourage the company to perform well over the long run.
A smaller but still large 18.9% of shares is held by institutions. Some of the 239 institutions holding a position in AMBP stock include Canyon Capital Advisors LLC, BlackRock Inc., Goldman Sachs Group Inc, and Citigroup Inc. Together, insiders and institutions hold 95.02% of all outstanding shares.
