S&P 500 falls on pressure from retail stocks, weak jobless claims
On Friday, President Trump announced a significant increase in aluminum tariffs, raising them from 25% to 50%, effective June 4th. This development is anticipated to affect beverage can producer stocks, including BALL (NYSE:BALL), which currently maintains a "GOOD" Financial Health score according to InvestingPro, CROWN HOLDINGS (NYSE:CCK), and ARDAGH METAL PACKAGING (NYSE:AMBP), negatively.
The analysis suggests that this tariff increase could lead to approximately 2% retail price inflation. The tariffs are expected to translate into a $0.02 price hike, representing about 18% of the cost of a beverage can. While analysts point out that the immediate impact on retail prices might be less severe due to factors like commodity hedging practices by beverage companies and the current aluminum price trends, BALL appears undervalued according to InvestingPro’s Fair Value analysis, with six analysts recently revising their earnings expectations upward.
Despite the tariff increase, the overall outlook for the global beverage can industry remains favorable. The announcement may, however, influence cost dynamics compared to other packaging materials like glass and plastic. Analysts will continue to monitor trends in U.S. volume and pricing by substrate.
The tariff increase comes at a time when the underlying aluminum price is below its March highs, which may offset some of the tariff’s impacts. Beverage companies typically hedge commodities 6 to 9 months in advance, potentially delaying the tariff’s full effect on the market.
In other recent news, Ball Corporation reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $0.76, compared to the forecasted $0.71. The company’s revenue reached $3.1 billion, exceeding the anticipated $2.9 billion. Additionally, Ball Corporation has announced the completion of its public offering of €850 million in senior unsecured notes due 2032, with an interest rate of 4.250%. The offering was initially set at €750 million but was increased due to demand. Truist Securities recently adjusted its outlook on Ball Corporation, raising the stock price target to $62.00 from the previous $58.00 while maintaining a Buy rating, following the company’s strong first-quarter performance. The company plans to use the proceeds from the notes for general corporate purposes, including debt refinancing and strategic investments. Ball Corporation’s forward-looking statements indicate expectations of completing the offering and issuing the notes, with the disclaimer that actual results could differ due to various risks and uncertainties. These developments highlight Ball Corporation’s ongoing strategic initiatives and financial maneuvers to support its growth objectives.
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