Amcor-3 Packaging Stocks to Keep an Eye on Despite Industry Headwinds

Industry Overview - The Zacks Containers - Paper and Packaging industry is experiencing weak demand due to lower consumer spending amid inflation, but pricing actions by industry players are expected to mitigate the impacts of supply-chain disruptions and elevated costs [1][4] - The industry is supported by rising e-commerce activities and increasing demand for sustainable packaging options due to environmental concerns [1][5] Market Dynamics - The industry has faced volume declines as consumers reduce spending and inventory levels, impacting top-line performance [4] - Supply-chain disruptions and higher costs for materials, labor, and transportation, along with tariffs, are adding pressure on margins [4] - Companies are implementing pricing strategies and cost-reduction actions to counter these challenges [4] E-commerce Impact - E-commerce accounted for over 19% of global retail sales in 2023, with revenues projected to reach $4.3 trillion by 2025, growing at a CAGR of 8% from 2025 to 2029 [5] - The U.S. online retail market is expected to exceed$ 1.5 trillion by 2026, while China's e-commerce market is projected to reach $2 trillion by 2027 [5] - The industry has significant exposure (over 60%) to consumer-oriented markets, ensuring stable demand for packaging solutions [5] Eco-Friendly Trends - There is a growing preference for biodegradable packaging materials driven by increased consumer awareness of environmental issues [6] - The industry is adopting new technologies and innovative products to meet this demand, including incorporating recycled content into production [6] Industry Performance - The Zacks Containers - Paper and Packaging industry ranks 149 out of 246 Zacks industries, placing it in the bottom 39% [8][9] - The industry has underperformed the S&P 500, declining 13.3% over the past year compared to the S&P 500's growth of 9.1% [10] Valuation Metrics - The industry is currently trading at a forward 12-month EV/EBITDA ratio of 19.76X, higher than the S&P 500's 12.88X and the Industrial Products sector's 19.30X [13] - Over the last five years, the industry has traded between 16.28X and 24.25X, with a median of 20.60X [16] Company Highlights - **Brambles (BXBLY)**: Reported a 1% year-over-year revenue increase to$ 4.9 billion, with expectations of 4-5% revenue growth in fiscal 2025 and underlying profit growth of 8-11% [17][18] - AptarGroup (ATR): The Pharma segment is seeing healthy demand for drug delivery systems, with a focus on acquisitions to expand technology and market presence [22][23] - Amcor (AMCR): Recently merged with Berry Global, expecting $260 million in pre-tax synergies in fiscal 2026 and projected annual cash flow exceeding$ 3 billion by FY28 [26][27]