AptarGroup: Breakout Confirmed (NYSE:ATR) | Searching for Alpha

As there may be increasingly more re-open speak, a few of the shares that can seemingly profit essentially the most, are beginning to transfer properly. A type of is AptarGroup (ATR). The corporate has survived what they’re calling the “Disaster Low Level” and appears to progressively get better over the second half of the 12 months. AptarGroup has a modest dividend, however a really effectively managed one that may be relied on for a small piece of earnings. All of this whereas the inventory begins to breakout of its latest tight buying and selling vary is a recipe for achievement.

Aptar Completes Acquisition of CSP Technologies

(Supply: Google)

Who Are They?

Based in 1992, AptarGroup operates in Asia, Europe, Latin America, and North America. They supply a variety of packaging, dishing out, and sealing options. They break this down into three segments: Magnificence + House, Pharma, and Meals + Beverage.

The Magnificence + House section primarily sells pumps, closures, aerosol valves, equipment, and sealing options to the private care and residential care markets; and pumps and ornamental elements to the sweetness market.

The Pharma section offers pumps for nasal allergy therapies; and metered dose inhaler valves for respiratory illnesses, comparable to bronchial asthma and continual obstructive pulmonary illnesses within the pharmaceutical market; and elastomer for injectable main packaging elements.

The Meals + Beverage section gives dishing out and non-dispensing closures, elastomeric stream management elements, spray pumps, and aerosol valves to the meals and beverage markets.

If you’re on the lookout for a COVID-19 restoration play, look no additional than the injectable market. AptarGroup manufactures/sells stoppers for infusion, antibiotic, lyophilization, and diagnostic vials; and pre-filled syringe elements, comparable to plungers, needle shields, tip caps, and cartridges, and dropper bulbs and syringe plungers. All of which is able to seemingly see a lift as soon as we start to distribute a vaccine the world over.

How Did Every Section Preform Throughout Q2?

AptarGroup has recognized Q2 because the “Disaster Low Level”. The Pharma section was leaned on to make up for a few of the let down from the opposite two. Drug supply has been a success, which has proven the potential for achievement long run in any surroundings. Demand for sanitizers and soaps did assist decide up a few of the slack as effectively, however the remainder of the segments have been hit negatively as a result of COVID-19 forcing closures throughout all industries.

All knowledge is from the corporate presentation.

Magnificence + House

  • Magnificence has been hammered essentially the most by COVID-19. However nonetheless accounts for twenty-four{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of their income. They’re most impacted as a result of decreased journey (retail gross sales) and shops being closed. E-commerce has not made up for what has been misplaced.
  • Private care accounts for roughly 19{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of income. Whereas they’ve additionally been hit as a result of shops being closed, sanitizers and cleaning soap have helped offset the hit barely.
  • House care has been very steady and accounts for 4{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of income. They’ve additionally seen a lift right here from the rise in demand for cleaners.


  • Pharma accounts for 38{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of income and has been the least affected as a result of COVID-19. A lot of the pharmaceuticals and OTC medicines can be found by way of supply for individuals who want it. There may be additionally a possible upside ought to injectable therapies for COVID-19 be developed.

Meals + Beverage

  • Meals is sweet for 10{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of the income. The meals service (trays/closures) has been impacted drastically as a result of restaurant closures. Main classes comparable to Condiments, Dairy, and Toddler Diet have remained steady.
  • Beverage solely accounts for five{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of income, however this is able to normally be greater. The beverage facet of issues has been negatively impacted as they depend on “on-the-go” drinks.

How Does The Second Half Look?

The corporate isn’t making any loopy optimistic statements. Which I believe is sensible. There may be nonetheless a lot uncertainty for a number of markets around the globe. COVID-19 continues to spike randomly, and seemingly uncontrolled. However, the corporate is anticipating gradual enchancment in comparison with the primary half of the 12 months as restrictions in most locations begin to ease. The corporate is predicting EPS to fall between $0.80 – $0.88 for Q3. For reference, it was $0.85 in 2019. There’s a likelihood they beat 2019, which might be huge and the inventory would seemingly see a really inexperienced day. On the finish of the day, money era goes to stay robust as YTD money stream is forward by $9 million this time final 12 months.

The apparent problem goes to proceed to beat COVID-19. They want travel-related retail shops to re-open greater than something. We won’t see the corporate again up at its “full” potential till that occurs. The offsets from a few of the sanitizers and soaps are good short-term fillers, however that too will dissipate over time.

How Is The Dividend?

Whereas the yield is nothing to scream about, it’s constant money stream. If you’re on the lookout for a little bit little bit of steady earnings, AptarGroup is the inventory for you. At the moment paying out $1.42 per share, and analysts expect the fixed annual rise in dividends to proceed as much as $1.60 by the top of subsequent 12 months. The corporate has a really robust historical past of not solely paying the dividend however growing it, as proven beneath. I’d financial institution on an annual increase of 4-6{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} from right here on out.

(Supply: TIKR.com)

As for its security, it is rather secure. The present payout ratio is sitting at 46{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}, and three years from now it’s anticipated to drop to 35{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}. Until one thing drastic occurs to their earnings, there is no such thing as a cause to be nervous a couple of reduce or something of that kind. Even when money stream has fallen brief previously, the payout ratio hardly ever hits 60{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05}. The inventory has recovered 50{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} off the lows in March and doesn’t seem like wanting again. Get pleasure from your small yield when you watch the inventory respect from right here.

What Does The Worth Say?

Having a look on the charts, the very first thing that stands proud to me is the tight squeeze we’ve seen from the Bollinger bands over the past month. This was certain to interrupt, only a matter of which means. As we are able to see beneath, we bought a breakout at this time. This has been on my watchlist for a little bit bit now, and I purchased into the breakout at this time at $120.73.

(Supply: TC2000.com)

Searching for help from right here, the plain help is the resistance we simply broke out of. I do anticipate a re-test of the $120.64 degree earlier than blasting off additional, however there must be very strong help right here because the inventory didn’t push by way of the extent at the very least 3 instances within the final 45 days.

My cease goes in at $114.77. That is solely about 6{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} down from present ranges which makes me really feel very snug. That is type of a midpoint to the place the inventory COULD fall to if issues bought ugly. $110 is the bottom I’d need a cease. That is the place we noticed the inventory dip to briefly on July thirty first. That is nonetheless solely about 9{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} from present ranges. Due to this tighter cease, I can allocate extra capital to the commerce.

(Supply: TC2000.com)

The 200-day shifting common additionally has a reasonably robust historical past of help. The excellent news is that the inventory has recovered from the March crash, and appears to be shifting up properly from right here. The dip on the thirty first took us again to the shifting common and held properly. We’re about 8{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} from the shifting common proper now which places us proper between the 2 stops I discussed above. You may use both of the three choices as a cease and sleep effectively at night time holding this one.

(Supply: TC2000.com)

By way of worth goal, I’m hoping we problem the earlier highs within the $125-$126 vary rapidly right here and breakout past that. I’m lengthy ATR.


As you possibly can see, the corporate has managed to navigate the worst of the COVID-19 disaster pretty effectively. Whereas some segments have struggled, others have picked up the slack. One of many advantages of a well-diversified firm. The dividend isn’t something to brag about, however they’re a lock for annual will increase, and there’s no concern over it getting reduce. Lastly, the technical image is a reasonably one proper now because the inventory breaks out of this tight vary with help throughout it. I stay up for a robust second half from AptarGroup. Keep secure on the market!

Disclosure: I’m/we’re lengthy ATR. I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Searching for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

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