BERY - Embedded Expectations Analysis - 2021 01 20
Berry Global Group, Inc. (BERY:USA) currently trades below historical averages relative to UAFRS-based (Uniform) earnings, with a 14.2x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management appears concerned about revenue growth, the resiliency of their end markets, and their growth investmentsSpecifically, management may lack confidence in their ability to sustain overall revenue growth, continue executing on key priorities, and identify and eliminate safety risk. Moreover, they may be exaggerating the resiliency and defense nature of their end markets, the appeal of their sustainability-focused products, and the potential of their customer-linked investments. In addition, management may be concerned about their exposure to quick-service restaurants, the impact of resin costs on working capital, and their growth investments
Berry Global Group is a supplier of a range of non-woven products used within consumer and industrial end markets. The company's segments are: Consumer Packaging International, which includes recycling, bottles and canisters, containers, polythene films, and technical components product groups; Consumer Packaging North America, which includes containers and pails, foodservice, and tubes product groups; Engineered Materials, which includes stretch and shrink films, converter films, food and consumer films, retail bags, polyvinyl chloride films, and agriculture films product groups; and Health, and Hygiene and Specialties, which includes health products, hygiene products, and specialties products.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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