10%-Yield Ardagh Metal Packaging Stock: Solid Q1 Results
May 6, 2024
Why AMBP Stock Has Been Jumping
Ardagh Metal Packaging SA (NYSE:AMBP) operates in an industry that most people don’t really think about: metal beverage cans.
Aside from the company’s name being a little underwhelming, Ardagh Metal Packaging only went public in August 2021. That might be why not many people are familiar with the company. It’s certainly worth putting on your radar, though.
The Luxembourg-based company supplies metal beverage cans and other types of packaging in Europe, the U.S., and Brazil from its 24 production facilities in nine countries.(Source: “Investor Factsheet: Q2 2023,” Ardagh Metal Packaging SA, last accessed May 1, 2024.)
Despite being a consumer cyclical company, Ardagh Metal Packaging is critical to the global economy. It helps protect, transport, market, and preserve products from virtually every sector on the planet. Beverages, cosmetics, fast food, pharmaceuticals, retail—you name it—they need packaging and containers.
The company’s cans are used to hold various types of beverages, including beers, carbonated soft drinks, energy drinks, hard seltzers, juices, pre-mixed cocktails, teas, sparkling waters, and wines.
Even during periods of economic headwinds, the packaging industry tends to do fairly well.
In 2019, the global beverage can market was worth $25.3 billion. By 2027, it’s expected to hit $36.6 billion, expanding by a compound annual growth rate (CAGR) of 4.7%. (Source: “Beverage Cans Market Size, Share & COVID-19 Impact Analysis,” Fortune Business Insights, April 15, 2024.)
From 2024 to 2028, the broader container and packaging market is forecast to expand by a CAGR of 8.5% to $591.6 billion. (Source: “Container and Packaging Market Analysis APAC, North America, Europe, Middle East and Africa, South America – US, Canada, China, India, UK – Size and Forecast 2024-2028,” Technavio, last accessed May 1, 2024.)
Those are the kinds of industry tailwinds that should help Ardagh Metal Packaging SA generate serious financial growth over the coming years.
The company has already reported revenue growth for the last four years, with its revenues hitting $4.81 billion in 2023. (Source: “Ardagh Metal Packaging S.A. – Fourth Quarter and Full Year 2023 Results,” Ardagh Metal Packaging SA, February 22, 2024.)
Analysts expect Ardagh Metal Packaging’s revenues to increase to $4.98 billion in full-year 2024 and reach $5.12 billion in 2025. They also expect the company’s earnings to enjoy a boost, swinging from a loss of $0.12 per share in 2023 to earnings of $0.15 per share in 2024 and $0.24 per share in 2025. (Source: “Ardagh Metal Packaging S.A. (AMBP),” Yahoo! Finance, last accessed May 1, 2024.)
Solid 1st-Quarter Financial Results
For the first quarter ended March 31, Ardagh Metal announced that its revenues inched up by one percent year-over-year to $1.14 billion. (Source: “Ardagh Metal Packaging S.A. – First Quarter 2024 Results,” Ardagh Metal Packaging SA, April 25, 2024.)
The company’s global beverage can shipments grew in the first quarter by seven percent, fueled by growth in the Americas of 11% and growth in Europe of three percent. Shipments in North America grew in the quarter by 13%.
Ardagh Metal’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew in the first quarter by three percent year-over-year to $134.0 million. The company reported a first-quarter net loss of $0.03 per share and adjusted earnings per share (EPS) that were consistent with the previous year’s EPS of $0.01.
Commenting on the results, Oliver Graham, Ardagh Metal Packaging SA’s CEO, said, “Our performance in the first quarter was encouraging, with volume growth across each of our markets and Adjusted EBITDA growth that was marginally ahead of expectations, due to favorable volume/mix.” (Source: Ibid.)
He added, “Our disciplined permanent capacity actions have taken effect and our expectation for continued volume growth and increased manufacturing activity will drive improved fixed cost absorption. This gives us confidence to reaffirm our full year guidance and we expect higher Adjusted EBITDA growth for the remaining quarters.”
For full-year 2024, Ardagh Metal expects to report shipment growth that approaches mid-single-digits and adjusted EBITDA in the range of $630.0 to $660.0 million.
For 2023, the company reported shipment growth of five percent and adjusted EBITDA of $600.0 million. (Source: Ardagh Metal Packaging SA, February 22, 2024, op. cit.)
Quarterly Dividend Maintained at $0.10 Per Share
Ardagh Metal Packaging SA only began paying dividends in 2022, so it doesn’t have a long dividend history. That said, it started off on the right foot, having paid $0.10-per-share dividends for the last nine quarters. (Source: “Ardagh Metal Packaging S.A. Ordinary Shares (AMBP) Dividend History,” Nasdaq, last accessed May 1, 2024.)
In late April, the company again declared a quarterly cash dividend of $0.10 per share. The dividend is payable on June 26 to shareholders of record as of June 12. (Source: “Ardagh Metal Packaging S.A. Declares Second Quarter Dividend 2024,” Ardagh Metal Packaging SA, April 25, 2024.)
As of this writing, that translates to a forward dividend yield of 10.13%.
Ardagh Metal Packaging Stock Has 25%+ Upside
AMBP stock has been performing quite well over the last year, going up by 16% over the last month, 24% over the last six months, and 12% over the last year (as of this writing).
Currently trading at its highest level since March 2023, Ardagh Metal Packaging stock has more room to run. Conservative Wall Street analysts have provided a 12-month median share-price forecast of $4.00 and a high forecast of $5.00. This points to potential gains of up to 26.3%.
Chart courtesy of StockCharts.com
The Lowdown on Ardagh Metal Packaging
Ardagh Metal Packaging is the only pure-play beverage can producer listed on the stock market. It has the No. 2 market share in Europe and the No. 3 market share in North America and Brazil. It also holds the No. 2 position globally in the glass industry.
After a year of transition in 2023, Ardagh Metal Packaging SA is poised to generate earnings growth in 2024 and beyond. Thanks to the high demand for the company’s products, the outlook for AMBP stock’s price and high-yield dividends is robust.
