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BERY – Market expectations are for Uniform ROA to reach new lows, but management is confident about innovation, segment realignment, and their advanced recycling business

April 8, 2021

  • Berry Global Group, Inc. (BERY:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 14.7x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, but management is confident about product innovation, their segment realignment, and their advanced recycling business
  • Specifically, management is confident they will continue to drive product innovation, improve their raw material inflation pass-through, and further monetize their advanced recycling business. Furthermore, they are confident there is a solid pipeline and process for approving capital investments and that their segment realignment allowed for more logical combinations of business lines and target industries. Moreover, management is confident modest price benefits were primarily driven by a favorable HHS mix and acquisition-related cost synergies, and that part of their robust cash flows can be returned to shareholder through dividends or share repurchases