Crown Holdings Posts 3Q Profit Win, Initiates Dividend Pay

Crown Holdings announced stronger-than-expected 3Q earnings. The metal can manufacturing company’s EPS jumped 25.6% to $1.96 per share year-over-year and surpassed analysts’ estimates of $1.58. Moreover, its 3Q revenues of $3.17 billion exceeded the Street’s estimates of $3.04 billion. Shares were up about 5% in Tuesday’s pre-market session.

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Looking ahead, Crown (CCK) expects 4Q EPS in the range of $1.22-$1.27, higher than the consensus estimate of $1.15. The company forecasts 2020 adjusted earnings in the range of $5.65-$5.70 per share, up from its previous guidance of $5.10-$5.25 per share. It also raised its 2020 free cash flow guidance to approximately $550 million from $475 million previously.

In addition, Crown announced that it will start paying a quarterly dividend of at least $0.20 per share from 1Q21 and expects to repurchase shares next year. (See CCK stock analysis on TipRanks).

Ahead of the 3Q results, Credit Suisse analyst Curt Woodworth last week initiated his coverage on the stock with a Buy rating and a price target of $111 (35.1% upside potential). Woodworth said that the North American aluminum can market grew sharply at a time when the industry was facing deficit conditions, which means that the pricing power can “accelerate sharply.” The analyst’s channel checks also indicate that can pricing is increasing by 5-8% for most sizes.

Currently, the Street is bullish on the stock. The Strong Buy analyst consensus is based on 9 Buys and 2 Holds. The average price target of $87.60 implies upside potential of about 6.6% to current levels. Shares have gained by about 13.3% year-to-date.