NEW YORK (TheStreet) -- Ball (BLL - Get Report) shares are down 2.55% to $75.21 in early market trading on Wednesday after the food and beverage metal packaging supplier agreed to purchase British rival Rexam plc for approximately $6.8 billion after the closing bell yesterday.
The offer is valued at 628 pence per share while Rexam was trading at 565 pence per share in London earlier today, according to the Wall Street Journal.
Exclusive Report: Jim Cramer's Best Stocks for 2015
Rexam shareholders will receive 407 pence in cash and 0.04568 new Ball shares for every share that they own, leaving them collectively with about 19% of the Ball's outstanding diluted shares.
"The combination of Ball and Rexam creates a global metal beverage packaging supplier capable of leveraging its geographic presence, innovative products and talented employees to better serve customers of all sizes across the globe; while at the same time generating significant shareholder value," said Ball CEO John A. Hayes.
TheStreet Ratings team rates BALL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BALL CORP (BLL) a BUY. This is driven by some important positives, 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 solid stock price performance, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, BLL's share price has jumped by 37.49%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BLL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Despite its growing revenue, the company underperformed as compared with the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 1.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- BALL CORP's earnings per share declined by 36.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BALL CORP increased its bottom line by earning $3.30 versus $2.73 in the prior year. This year, the market expects an improvement in earnings ($3.94 versus $3.30).
- 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. In comparison to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, BALL CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- Net operating cash flow has declined marginally to $362.50 million or 6.35% when compared to the same quarter last year. Despite a decrease in cash flow of 6.35%, BALL CORP is in line with the industry average cash flow growth rate of -10.47%.
- You can view the full analysis from the report here: BLL Ratings Report