Ardagh Metal Stock: 10%-Yielder Reports Strong Q2
October 17, 2024
AMBP Outlook Bullish on Industry Tailwinds
There’s good reason to take a look at Ardagh Metal stock today.
One of the most important parts of selling any product is the packaging. Not only does it help protect and preserve, but packaging also helps sell a product. And with so many different products competing for shelf space and a consumers’ attention, the packaging market is expected to grow quite quickly over the coming years.
In 2024, the food and beverage metal cans market is estimated at $50.42 billion. 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, last accessed October 7, 2024.)
One company with a big foothold in this under-the-radar industry is Ardagh Metal Packaging SA (NYSE:AMBP). Because the Luxembourg-based company only went public in August 2021, it’s not well known to most investors. But, with a market capitalization of $2.25 billion, it’s worth putting on your radar. (Source: “Investor Factsheet,” Ardagh Metal Packaging SA, last accessed October 7, 2024.)
Ardagh Metal Packaging is a leading global supplier of infinitely recyclable, sustainable metal beverage cans to brand owners. It’s a subsidiary of sustainable packaging business Ardagh Group.
Ardagh Metal is a leading industry player with the #2 market position in Europe and #3 share in North America and Brazil.
More broadly, the company operates 23 production facilities in nine countries, with sales of $4.8 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $600.0 million in 2023.
| Year | Revenue |
| 2017 | $3.1 billion |
| 2017 | $3.4 billion |
| 2019 | $3.4 billion |
| 2020 | $3.4 billion |
| 2021 | $4.1 billion |
| 2022 | $4.7 billion |
| 2023 | $4.8 billion |
| Year | Adjusted EBITDA |
| 2017 | $452.0 million |
| 2017 | $500.0 million |
| 2019 | $503.0 million |
| 2020 | $545.0 million |
| 2021 | $662.0 million |
| 2022 | $625.0 million |
| 2023 | $600.0 million |
Ardagh Metal’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 the company helps protect, transport, and preserve products in virtually every sector, Ardagh Metal’s products are in demand throughout the economic cycle.
Strong Earnings Performance
For the second quarter ended June 30, 2024, Ardagh Metal Packaging announced that revenue inched up $4.0 million to $1.259 billion. Global beverage can shipments grew three percent in the quarter driven by strong growth of five percent in Europe, with growth of one percent in the Americas. (Source: “Second Quarter 2024 Results,” Ardagh Metal Packaging SA, July 25, 2024.)
Adjusted EBITDA advanced 18% to $178.0 million, which was ahead of guidance. The company reported adjusted earnings of $33.0 million, or $0.06 per share, up from $23.0 million, or $0.04 per share, in the same prior-year period.
Commenting on the results, Oliver Graham, Ardagh Metal’s chief executive officer, said, “Our strong earnings performance, reflected in double-digit Adjusted EBITDA growth in both regions, delivered a second successive outperformance against our quarterly guidance.”
“Strong performance in Europe underpinned our outperformance in the quarter and continued growth in the region gives us the confidence to improve our guidance range for Adjusted EBITDA growth in 2024.”
Looking ahead, the company increased its guidance; it now expects to report:
- Q3 adjusted EBITDA of $185.0 million, up from $171.0 million in Q3 2023
- 2024 shipment growth approaching the mid-single digits
- Full-year 2024 adjusted EBITDA in the range of $640.0–$660.0 million, up from the previous guidance range of $630.0–$660.0 million
Quarterly Dividend of $0.10/Share Maintained
Ardagh Metal stock only began paying a dividend in 2022, so it doesn’t have a long dividend history. With that said, it’s starting off on the right foot, having paid a $0.10-per-share dividend over the last two years.
In July, the company declared a quarterly cash dividend of $0.10 per share, or $0.40 on an annual basis for a forward dividend yield of 10.67%. (Source: “Ardagh Metal Packaging S.A. Declares Quarterly Dividend,” Ardagh Metal Packaging SA, July 25, 2024.)
AMBP Shares Up 43%, But Have Additional 20%+ Upside
Ardagh Metal stock has done exceptionally well over the last 12 months, climbing 43%. AMBP is also up 7.8% over the last month and 12.3% over the last six months.
Despite the solid gains, Wall Street thinks Ardagh Metal stock could climb a lot more over the coming quarters, with analysts providing a 12 month share price target range of $3.75 to $4.50 per share. This points to potential upside of up to 21.5%.
Chart courtesy of StockCharts.com
The Lowdown on Ardagh Metal Stock
Ardagh Metal Packaging is the only pure-play, listed beverage can producer. As mentioned, it has the #2 market share in Europe and #3 market share in North America and Brazil. It also holds the #2 position globally in the glass industry.
After going through a year of transition in 2023, the company has been reporting solid results in 2024 and has improved its balance sheet and increased its 2024 adjusted EBITDA guidance and shipment growth.
