NEW YORK (TheStreet) -- Shares of Bemis Co. (BMS) are up 3.74% to $42.70 after BMO Capital Markets upgraded the Wisconsin-based packaging company to "outperform" and raised its price target to $47 from $39.
"Our upgrade is driven by a variety of external and internal factors: margins are poised to expand, [there is] cautious optimism around recent leadership changes, and expectations are low," analysts said.
"With a modest relative valuation, 2.6% dividend yield, strong balance sheet (2.2x levered), multiple margin opportunities, and fresh leadership, there are lots of reasons to own BMS at current levels," analysts added.
Separately, TheStreet Ratings team rates BEMIS CO INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BEMIS CO INC (BMS) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BEMIS CO INC has improved earnings per share by 29.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, BEMIS CO INC increased its bottom line by earning $1.91 versus $1.65 in the prior year. This year, the market expects an improvement in earnings ($2.29 versus $1.91).
- The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.10, which illustrates the ability to avoid short-term cash problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, BEMIS CO INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- BMS, with its decline in revenue, underperformed when compared the industry average of 9.9%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full analysis from the report here: BMS Ratings Report