FIN824
Stock Analysis
Crown Holdings (CCK)
International Paper(IP)
Presented by
Hui Jiang
Chris Pflum
November 29, 2011
Current Portfolio Weight- Materials
S&P 500 Weight
Materials
3.56%
Telecom
3.02%
Consumer
Utilities Discretionary
3.70%
10.65%
Information
Technology
19.68%
SIM Weight
Telecom
4.12%
Consumer
Staples
11.05%
Energy
12.27%
Health Care
11.51%
Industrials
10.56%
Materials
3.25%
Dividend
Receivables
0.08%
Utilities
Cash
2.57%
3.98%
Consumer
Discretionary
8.74%
Information
Technology
21.69%
Financials
14.00%
Consumer
Staples
12.24%
Energy
12.41%
Health Care
11.77%
Industrials
9.08%
Financials
10.06%
Currently Underweight 31bp
Class voted to HOLD
Crown Holdings (CCK)
Company Overview
Current Price: $30.25 (11/25/11)
52 Week Range: $28.68 - $41.58
Beta: .62
Recommendation: BUY
Crown Holdings (CCK)
Company Overview
•
Founded in 1892
•
Headquartered in Philadelphia, Pennsylvania
•
Designs, manufactures, and sells to food, beverage and consumer
goods manufacturers packaging products
•
Products include beverage cans and ends, food cans and ends, and
aerosol cans and ends
•
Company also manufactures and sells can-making equipment
•
Facilities in the Americas, Europe, the Middle East, Africa, and the
Asia-Pacific
Crown Holdings (CCK)
Company Overview
Catalysts for Growth
•
•
•
•
•
Commencement of activities at a second line in Estancia, Brazil and
a new plant in Ponta Grossa, Brazil, with a second line coming on
there in the second quarter.
Commencement of second line at a plant in Slovakia.
Expected completion of new plants in Brazil, Turkey, and China(3) in
2012.
Commencement of production at second beverage line in
Cambodia.
Under current expansion plan, Crown will have (9) new beverage
can plants, a 27% increase in overall beverage can capacity
Crown Holdings (CCK)
Company Overview
Risks
•
Historically able to directly pass through supply cost increases,
however significant increases may lead customers to substitutes
such as plastics, glass and paper
•
Constraints or shortages in tin or aluminum would significantly
impact Crown
•
Currently has operations in 41 countries making reporting of
financial information subject to currency translation risks
•
European operations currently account for 47% of Crown’s
revenues. A significant downturn could affect Crown’s earnings
Crown Holdings (CCK)
Company Overview
Financial Performance
Net Sales
(USD Millions)
$8,300
$8,100
$7,900
$7,700
$7,500
$7,300
$7,100
$6,900
$6,700
$6,500
$6,300
$6,100
$5,900
2001
Sales
Net Inc
EPS
2002
2010
7,941
452
2.78
2003
2004
2011E
8,649
470
2.86
2005
2006
2007
2008
2012E
9,154 (5.8%)
554
3.37
2009
2010
2013E
9,695 (5.9%)
705
4.28
Crown Holdings (CCK)
Company Overview
Financial Performance
Relative to
Industry
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
1.5
1.4
13.1
1.1
1.8
.81
.73
9.4
.5
.7
1.1
1.1
10.7
.7
1.3
.99
1.1
NM
1.0
1.5
Relative to S&P
500
P/Trailing E
P/Forward E
P/B
P/S
P/CF
High
Low
Median
Current
1.3
1.2
20.6
.6
1.2
.69
.68
14.4
.3
.6
1.0
.93
16.2
.4
.9
.95
.86
NM
.5
1.0
Crown Holdings (CCK)
Company Overview
Valuation
Absolute
Valuation
High
Low
Median
Current
Target
Multiple
P/Forward E
P/S
P/EBITDA
P/CF
206.2
.8
11.8
11.7
9.9
0
.19
.2
17.6
.4
4.6
6.8
12.1
.6
4.64
8.5
14.8
.6
5.31
8.7
Terminal
Discount Rate =
11.0%
Terminal FCF
Growth =
4.0%
Current Price
Target
E, S, B,
etc/Share
2.83
52.58
4.74
2.32
Target
Price
41.88
31.55
25.17
20.17
$
30.25
Implied equity value/share $
40.83
Crown Holdings (CCK)
Company Overview
Valuation
Multiples
DCF
Valuation
$41.88
$40.83
Weight
50%
50%
Weighted
$20.94
$20.42
Composite
Current
Upside
$41.36
$30.25
36.7%
Analyst Consensus
$42.25
(Recommendation: BUY)