October 3, 2011 - Ball Corporation (BLL-NYSE) is a provider of metal and plastic packaging for beverages, foods and household products (91% of 2010 sales), and of aerospace and other technologies and services to commercial and governmental customers ((9% of '10 sales). Founded in 1880, the company employs more than 14,500 people in more than 90 locations worldwide. In 1993, it spun off Ball Glass Container which is now owned by Jarden Corporation.

In the first six months of this year, global beverage can demand was up by single digits. Not bad for a worldwide economy that's struggling to gain traction. Prices also were higher because raw materials costs were passed on. Other divisions in the company saw increased orders as well. Together these combined for a June quarter that finished with earnings of 85 cents, 1 cent below expectations but above last year's 77 cents in the second period. In the first quarter, earnings were 58 cents, 10 cents above estimates, or a positive surprise of 20.8%. Analysts see continued solid demand for beverage cans and favorable pricing for the rest of this year and next.

To help boost earning per share (EPS), the board approved an acclerated stock buyback program with a target of 3.4 million shares to be bought by the end of this year. Hurting earnings will be increased interest expenses arising from acquisitions made in the last year (it bought Aerocan, a high growth European maker of aerosol containers in January and Neuman Aluminum in July of last year). Also reenforcing analysts' higher expectations for earnings is the $1 billion backlog in the aerospace division. The company is expanding into more international markets, having recently added capacity to its Brazil and Serbia metal-packaging business. Look for more expansion in existing markets such as Vietnam and China. Simultaneously, management is closing certain plants where demand has slowed, helping to increase efficiencies.

The focus is on Asia for growth. With higher wages and more wealth creation, demand for beverages and consumption in general can only go up. Expect China and Vietnam to show the largest gains.

Essential numbers:
- Market Cap: $5.06 billion
- Operating margin: 10.32%
- Profit margin: 6.64%
- Return on equity: 35.61%
- Return on assets: 7.44%
- Total revenues last 12 months: $8.35 billion
- Total cash: $144.08 million
- Cash per share: 89 cents
- Current ratio: 1.56
- Book value per share: $9.49
- Price to book: 3.27
- Beta: .46
- Change in last 52 weeks: 4.46%
- Shares Outstanding: 163.55 million
- Float: 160.55 million
- Insiders own: .96%
- Institutions own: 74.8%
- Annual Dividend: 28 cents
- Yield: .9%

Early this year, the stock split 2 for 1, ran to $40.56 on July 8, and has since been trending lower. At some point soon, especially if there is another upside surprise earnings report, this stock may have a compelling price that represents a good entry point.

- Company Web site: www.ball.com

    Ted Allrich