Is There Still Value In Ball (BALL) After This Year’s 19% Share Price Gain

• Wondering if Ball at around US$61.43 is priced low, high, or somewhere in the middle? This article walks through what the numbers actually say about value.
• The stock has returned 3.6% over the last month and 15.1% year to date, while the 1 year return sits at 19.0% and the 5 year return at a decline of 30.1%.
• Recent coverage has focused on Ball as a packaging player that many investors watch closely, which helps explain why shifts in sentiment can move the share price over shorter periods. Broader attention on materials and packaging companies has also kept Ball on the radar of investors looking at long term trends in demand and costs.
• Simply Wall St's value score for Ball currently stands at 3 out of 6. The next sections break down how different valuation methods arrive at that view, before finishing with a tool that can help you assess value in a more holistic way.

Ball delivered 19.0% returns over the last year. See how this stacks up to the rest of the Packaging industry.

Approach 1: Ball Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash a company might generate in the future, then discounts those cash flows back to today to arrive at an estimated intrinsic value per share.

For Ball, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month Free Cash Flow sits at about $549.9 million. Analyst estimates and Simply Wall St extrapolations project Free Cash Flow moving to around $1.12 billion by 2028, with a detailed path mapped out for the next ten years.

Pulling those projections together, the DCF output suggests an intrinsic value of about $102.00 per share. Compared with the recent share price of roughly $61.43, this implies a discount of 39.8%. On this model, the stock screens as undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Ball is undervalued by 39.8%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Ball.

Approach 2: Ball Price vs Earnings

For profitable companies, the P/E ratio is a straightforward way to see how much you are paying for each dollar of earnings. A higher or lower P/E often reflects what the market is pricing in around future earnings growth and the level of risk investors are willing to accept.

Stronger growth expectations or lower perceived risk can support a higher P/E, while slower growth or higher risk typically point to a lower, more cautious multiple. Ball currently trades on a P/E of 17.93x. That sits above the Packaging industry average P/E of 15.59x and close to the peer average of 17.57x.

Simply Wall St’s Fair Ratio for Ball is 20.68x. This Fair Ratio is a proprietary estimate of what P/E could be reasonable given factors such as earnings growth, industry, profit margin, market cap and risk. It can be more informative than a simple comparison with peers or the industry because it adjusts for company specific characteristics instead of assuming every packager deserves the same multiple.

Comparing Ball’s current P/E of 17.93x with the Fair Ratio of 20.68x suggests the shares are trading below that Fair Ratio estimate.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Ball Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced as your way to attach a clear story about Ball, including your own fair value, revenue, earnings and margin assumptions, to a financial forecast that Simply Wall St then translates into a fair value you can compare with the current price on the Community page. Each Narrative updates automatically when fresh news or earnings arrive and reflects different viewpoints, such as a more optimistic fair value of US$77.00 or a more cautious view around US$51.79, helping you see where your own view sits on that spectrum and what that means for your next decision.

For Ball, here are previews of two leading Ball Narratives to make comparison easier:

🐂 Ball Bull Case

Fair value in this bullish narrative: US$70.86 per share.

At a recent price of US$61.43, this narrative views the shares as about 13.3% below its fair value.

Revenue growth assumption: 4.7% a year.

• Frames Ball as a beneficiary of demand for recyclable aluminum packaging and ready to drink beverages, supported by new capacity and a tighter focus on core packaging.
• Relies on analysts expecting higher margins, earnings of about US$1.2b by 2029, and a future P/E of 17.7x to support the fair value.
• Highlights risks around customer concentration, input costs, product mix, operations and regulation that could challenge those earnings and margin assumptions.

🐻 Ball Bear Case

Fair value in this more cautious narrative: US$60.33 per share.

At a recent price of US$61.43, this narrative views the shares as about 1.8% above its fair value.

Revenue growth assumption: 3.2% a year.

• Focuses on a slower revenue build and a lower P/E multiple, with fair value anchored closer to the more bearish end of analyst targets.
• Assumes earnings of about US$950.0m by 2028, higher margins over time and steady buybacks, but on more restrained growth expectations.
• Flags economic pressures in key regions, volume uncertainty, pricing pressure, supply chain costs and execution on new assets as key swing factors for the story.

If you want to see how your own expectations compare with these views and others on the Community page, you can review the full range of narratives for Ball, including both bullish and bearish takes, then decide which assumptions feel closest to your own.

See what the community is saying about Ball

Do you think there's more to the story for Ball? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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