Insights

Why Ball Corporation Stock Plunged Today

What happened

Shares of aluminum company Ball Corporation (NYSE: BALL) plunged on Thursday after profitability for the second quarter of 2022 fell short of expectations. As of 3:15 p.m. ET, Ball stock was down 18%.

So what

Let’s start with net sales. In Q2, Ball generated net sales of $4.1 billion, up almost 20% year over year. This was significantly ahead of analysts’ expectations with strong demand for beverage cans (for most of the quarter) and solid performance in its aerospace division. 

Revenue was up, but Ball’s earnings took a big hit and it’s one of the reasons the stock was down today. The company had a net loss of $165 million compared to net income of $202 million in the same quarter last year. However, this is primarily due to divesting its assets in Russia because of its war with Ukraine, resulting in a one-time noncash impairment charge.

That said, Wall Street still wasn’t impressed with Ball’s Q2 performance. Truist analyst Michael Roxland downgraded Ball stock from a buy to a hold, according to The Fly.

Now what

One thing that particularly troubled Roxland was weakness in Ball’s North America beverage segment. And indeed, Ball did say that demand slowed down significantly late in the quarter. Consequently, the company is delaying the opening of its new manufacturing facility in North Las Vegas.

Business has slowed for Ball and caused investors to sell the stock. But this might be an opportunity for some. Right now, Ball has a market capitalization of $19 billion, but is on track to return $1 billion to shareholders this year via dividends and share repurchases. That could provide a significant earnings-per-share boost in coming years, making now a better-than-average time to get in on this historically stable business.

Jon Quast has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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