Here's why Orora Ltd jumped 10% today: Is the stock a buy?

Orora Ltd (ASX:ORA) might not look cheap, but it's certainly worth a second look. Here's why…

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Orora Ltd (ASX: ORA) shares surged as much as 10.4% this morning after the packaging and distribution company reported a strong lift in overall revenues and profits. For the half-year ended 31 December 2014, Orora's pro-forma net profit rose a staggering 23% to $69.1 million on the back of a 3.4% lift in sales.

So What: Orora was spun-off from parent company Amcor Limited (ASX: AMC) in December 2013 in order to allow the business to pursue organic growth and to unlock greater shareholder returns. The strategy certainly appears to have worked with Orora now focused on cost reductions and efficiency improvements, while it is also exploring acquisitions.

Over the six-month period, Orora Australasia delivered a 10.7% lift in EBIT (earnings before interest, tax), despite flat market conditions. Improved manufacturing efficiencies and market share gains in its wine segment helped drive earnings in its beverage business higher, while cost improvement initiatives drove the results in its Fibre Group division. Meanwhile, Orora North America also delivered a 16.3% increase in EBIT on a constant currency basis.

In regards to full-year earnings guidance, Orora's CEO Nigel Garrard said: "It is expected the group will continue to drive organic growth and deliver on the cost-reduction initiatives in 2015, with earnings to be higher than that reported on a pro forma basis in 2014, subject to global economic conditions".

Investors will receive an unfranked interim dividend of 3.5 cents per share, which is up from 3 cents previously.

Now What: Even with Orora's shares having retreated to $2.12 this afternoon (after rising as high as $2.23 earlier), the stock is still not cheap, per se. At that price, shares are trading for roughly 21x this year's forecast earnings which is well above the market average.

However, the company is showing strong signs of growth and could strengthen its position by way of strategic acquisitions and continued efficiency improvements. As such, Orora is certainly a company worth keeping an eye on.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

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