Market Edge Research

Equity Research Report

BALL CORP
BLL-$41.09 Exchange:NYSE

BUY
March 26, 2012

Recommendation
Opinion

BUY

Opinion Date Opinion Price

10/31/2011 35.66

Current Price Prior Opinion

41.09 HOLD

Summary:
A review of the fundamental factors for BLL reveals a company with a mixed financial picture. The stock is fairly valued when compared to other stocks in its industry group but still has the potential for price appreciation. BLL's management is effectively managing its total resources to generate profits for the company when compared to industry averages. The companys long and short term debt ratios are in line with industry averages reflecting a solid financial condition. Operating margins declined last quarter but operating cash flow remains positive. Demand for the companys products and services has been strong as sales for the last quarter grew 2.83% rising to $2.05 billion. Looking forward, the analyst consensus forecast for revenue and earnings for the next two quarters is expected to show improvement versus the prior quarter. Price momentum is strong and the stock has performed in line with the market when compared to the S&P 500. This combination of current conditions should provide an opportunity for some price appreciation for BLL. Should the fundamental picture improve, the possibility of price appreciation will also increase. Business Description: Ball Corporation, together with its subsidiaries, supplies metal packaging products for the beverage, food, personal care, and household products industries in the United States and internationally. Economic Sector: Capital Goods Industry: Cont. (M&G) Number of Employees: 15,000 Share Information
52-Week Range: Market Capitalization: Common Shares Outstanding: Number of Institutional Shareholders: Shares Held By Institutions: % Held By Institutions: Dividend: Dividend Yield: Last Stock Split Last Split Date: Book Value Per Share: EPS Estimate 2012: EPS Estimate 2013: P/E on Estimate 2012: P/E on Estimate 2013: $29.69-41.79 $6,413 mil 156 mil 822 119 mil 76.81% $0.40 0.97% 2 for 1 2/16/2011 $7.40 $3.08 $3.41 13.34 12.04

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Analysis
Quarter EPS Q1 Q2 Q3 Q4 Year Annual EPS 2012 2011 2010 2009 2008 2007 2011 0.53 0.79 0.47 2.64 $ E3.08 2.64 2.96 2.04 1.64 1.37 2010 0.43 0.37 1.24 0.91 2.96 2009 0.37 0.70 0.54 0.42 2.04

Positive Factors on BLL

Valuation:
The TTM (Trailing Twelve Month) Price/Earnings (P/E) ratio is 15.62. This ratio is lower than the average P/E for this Industry Group (Cont. (M&G)) which is 20.49. The P/E of the S&P 500 is 3.67. The Price/TTM Sales ratio is 0.83. A stock with a low Price/Sales ratio indicates a stock is not overvalued. The Price/Sales ratio is significant since it is harder to manipulate sales than earnings. The Price/TTM Sales ratio for this Industry Group (Cont. (M&G)) is 1.19.

Yr. Over Yr. Growth % 16.67%

-10.81%
45.10% 24.39% 19.71%

Profitability:
The Return on Assets (ROA) is 7.90. A high ROA is a good profitability measure since it reflects the ability of management to produce profits from each dollar of company assets. The average ROA for this Industry Group (Cont. (M&G)) is 4.78. The Operating Cash Flow was Positive in the last three years. The Return on Equity (ROE) is 68.21%. This ratio helps represent the future ability of a company to grow earnings. The average ROE for this Industry Group (Cont. (M&G)) is 24.93%.

Balance Sheet Strength:

The Current Ratio is 1.25. Current ratios above 1 mean that a companys shortterm debts are less than its assets. The higher the ratio, the stronger the companys finances. The Long-Term Debt/Capital is 66.18%. This indication of financial leverage measures the extent of a firms capital that is provided by lenders. Below 25% reflects well on a companys financial stability. The average LT Debt/Capital for this Industry Group (Cont. (M&G)) is 73.27%.

Analyst Consensus Forecast:

The Earnings Per Share (EPS) forecast for the next two quarters is greater than the prior quarter EPS. Revenue 2012 2011 2010 2009 2008 2007 mil$ E8,877 8,568 7,637 7,345 7,562 7,475 Yr. Over Yr. Growth % 3.61% 12.19% 3.97% The Revenue forecast for the next two quarters is greater than the prior quarter Revenue.

Insider Activity
3 Buyers/1 Sellers net Buy 700 shares.

-2.86%
1.15%

Negative Factors on BLL

Valuation:
The Price/Book Value ratio is 5.55. The average Price/ Book for this Industry Group (Cont. (M&G)) is 0.89. The Price/Cash Flow ratio is 47.22. A low ratio shows a strong ability to generate cash and reflects well on a companys stock price and liquidity. The average Price/Cash Flow ratio for this Industry Group (Cont. (M&G)) is 22.25.

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Income Stmt. (mil$) Revenue Oper. Inc. Depr. Int. Exp. Pretax Inc. Eff. Tax Rate Net Inc.

2011 8,568 796 280 177 660 30.51% 444

2010 7,637 763 252 147 606 28.99% 468

The Market Edge PEG (Leading P/E Ratio / Earnings Growth Rate) ratio is 1.25. This ratio is the Leading P/E ratio divided by expected per-share earnings growth over the coming year. A PEG ratio greater than 1 indicates a stock may be overvalued or the market expects future EPS to be greater than the EPS consensus. The average Market Edge PEG ratio for this Industry Group (Cont. (M&G)) is 1.02.

Profitability:
The prior quarter Operating Margin of 9.69% is less than the TTM Operating Margin of 10.20%.

Growth Potential:
Balance Sheet (mil$) Cash Curr. Assets Total Assets Curr. Liab. LT Debt Total Cap. LT Debt/Cap. ROA ROE 2011 185 2,322 7,255 1,856 2,697 4,075 66.18% 7.90% 2010 255 2,306 6,893 1,383 2,702 4,360 61.97% 8.42% 30.20% The prior quarter EPS of $0.47 is less than the EPS of the year over year quarter of $0.91. The prior quarter EPS growth rate of -48.35% is smaller than the TTM EPS growth rate of -10.84%. The TTM Sales Per Share (SPS) growth rate of -0.96% is less than the three-year cumulative average SPS growth rate of 4.43%. The TTM EPS growth rate of -10.84% is less than the TTM SPS growth rate of 0.96%. The EPS growth rate of 10.71% is less than the expected next year EPS growth rate for S&P 500 of 12.83%. Earnings Trend is Negative for the last three quarters on a year over year basis.

Industry: Containers & Packaging

Peer Group: Metal & Glass
PeerGroup BALL CORP CROWN HOLDINGS MOBILE MINI OWENS-ILLINOIS SILGAN HOLDINGS Symbol BLL CCK MINI OI SLGN Close (03/26/12) 41.09 36.56 21.59 23.35 43.91 P/E Ratio 15.62 19.97 30.40 NA 15.96 Market Cap (mil$) 6,413 5,575 962 3,964 3,088 TTM EPS 2.63 1.83 0.71 -3.12 2.75 TTM Sales Growth% -0.96 -0.24 3.17 2.26 0.88 TTM Operating Margin(%) 10.20 10.55 27.95 12.18 9.71 ROE (%) 68.21 N/A N/A -28.14 34.71 Yield (%) 0.97 NA NA NA 1.08

Market Edge Peer Group Comparison looks at key fundamental performance measures to help determine a stocks overall valuation and potential when compared to similar stocks in its industry.

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Simple Moving Average(MA) Analysis

Simple MA 10 Day 21 Day 50 Day 200 Day Price 40.68 40.28 39.51 36.69 % 101 102 104 112 Slope UP UP UP UP

Technical Comments
Chart pattern indicates a Strong Upward Trend. (See chart below.) Relative Strength is Neutral. Up/Down volume pattern indicates that the stock is under Distribution. The 50 day Simple Moving Average is rising which is Bullish.

Volume Analysis
Average Volume(00) Monthly Change(%) Up/Down Ratio Up/Down Slope 10,900 8.90% 1.20

The 200 day Simple Moving Average is rising which is Bullish. Look for Support at 40.01

DOWN

Technical Analysis
Trend Line Resistance Trend Line Support Resistance Range Support Range Beta MACD Long-Term 50-Day Relative Strength RSV N/A 40.01 41.45-41.79 40.69-41.07 0.95 Bullish 1.01 76

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