Why the Amcor (ASX:AMC) share price is outperforming today

The Amcor CDI (ASX: AMC) share price is outpacing the broader market as leading brokers reiterated their buy calls following …

| More on:
amcor share price, packaging, factory, container, production

The Amcor CDI (ASX: AMC) share price is outpacing the broader market as leading brokers reiterated their buy calls following its results release yesterday.

Shares in the packaging giant jumped 2.3% to $16.50 in morning trade. In contrast, the S&P/ASX 200 Index (Index:^AXJO) gained a modest 0.3% at the time of writing.

The gains by the Amcor share price comes on top of yesterday’s 0.7% advance when management posted a 12% increase in first quarter adjusted earnings per share to US17.7 cents.

Amcor share price gains on market-beating results

The results were ahead of consensus forecast of US17 cents a share, according to Macquarie Group Ltd (ASX: MQG). The broker reiterated its “outperform” recommendation on the Amcor share price.

“Q1 is AMC’s weakest Q on seasonal basis given Northern Hemisphere summer,” said Macquarie.

“Q1 eps was 21.2% and 20.9% of FY eps in Q121 and Q120, respectively. Q122 represents 22.0% of our FY22 eps so running slightly ahead of traditional Q1 %.

“Quarterly dividend was increased to 12.0cps vs 11.75cps in the pcp.”

Macquarie’s 12-month price target on the Amcor share price is $18 a share.

Flexible earnings

Meanwhile, UBS also reiterated its “buy” rating on the shares after Amcor’s EPS came in 3% above its estimates.

“The EPS growth was underpinned by strong cost control/Bemis synergies as well as favourable product mix which more than offset significant raw material availability challenges,” said the broker.

Amcor’s flexible packaging division was the standout with earnings before interest and tax (EBIT) rising 9% in the September quarter to US$339 million compared to the same time last year.

In contrast, its rigid packaging division was weak as EBIT fell 14%. This is due to raw material shortages and supply chain disruptions caused by the COVID-19 pandemic.

Full year guidance gives Amcor share price a boost

Despite the challenges, Amcor reiterated its full year earnings guidance. Management is tipping constant currency EPS growth of between 7% and 11%. Consensus has pencilled in a rise of 8% – the lower end of guidance.

But with the strong first quarter performance, consensus may prove to be too conservative. Earnings upgrades could be in the wings.

“We are attracted to Amcor’s leading position across key global consumer packaging markets,” said UBS.

“The defensive nature of these markets as well as Amcor’s significant scale is clearly supporting earnings growth and cash flows despite significant volatility in raw material supply and pricing.”

M&A opportunities could provide extra tailwind

Further, the broker believes Amcor could have up to $1 billion in balance sheet capacity that could be used for an earnings accretive acquisition.

Good luck in finding a bargain to buy in these markets though. But that challenge doesn’t take anything away from Amcor’s strong results.

UBS’ 12-month price target on the Amcor share price is $18.83.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

More on Share Gainers

Young woman in yellow striped top with laptop raises arm in victory
Share Gainers

These were the best performing ASX 200 shares last week

The S&P/ASX 200 Index (ASX: XJO) had a week to forget after the US Federal Reserve indicated that it would start to …

Read more »

An oil miner with his thumbs up.
Energy Shares

Why are AGL (ASX:AGL) shares having such a stellar start to 2022 while the ASX 200 is struggling?

Key points AGL was one of the worst performing ASX 200 shares of 2021 But 2022 has given this company …

Read more »

Concept image of a businessman riding a bull on an upwards arrow.
Share Gainers

Why Champion Iron, Dusk, Hipages, and Imugene shares are charging higher

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is rebounding strongly from recent declines. At the time of writing, …

Read more »

a smiling woman holds up two fingers and winks.
Share Gainers

Top 2 ASX 200 shares of the year so far revealed

S&P/ASX 200 Index (ASX: XJO) shares as a whole haven’t gotten off to the strongest of starts in 2022. After …

Read more »

a man looks down at his phone with a look of happy surprise on his face as though he is thrilled with good news.
Share Gainers

Why Beach, Jumbo, Premier Investments, and Western Areas are pushing higher

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record another disappointing decline. At the time of …

Read more »

A man in a blue collared shirt sits at his desk doing a single fist pump as he watches his Neometals shares rising on his laptop
Resources Shares

Why is the BHP (ASX:BHP) share price leaping ahead today?

The S&P/ASX 200 Index (ASX: XJO) has unfortunately slipped into negative territory so far this Thursday, after an initially strong market …

Read more »

Businessman in suit and holding a briefcase jumps into the sky celebrating the rising Enero share price
Share Gainers

‘Exclusive provider’: Genworth (ASX:GMA) share price leaps 12% on CBA deal

Key points Genworth is cruising today following a company announcement The company has been selected as the exclusive provider of …

Read more »

A group of people cheer at a blackjack table in a casino
Share Gainers

Why the PointsBet (ASX:PBH) share price is rocketing 9% today

Key points The online gambling market continues to grow West Virginia becomes the third US state to host PointsBet’s online …

Read more »