SEE - Sealed Air: The Market Has Overshot On Its Way Down

2024-02-16 23:50:57 ET

Summary

• SEE is a low-growth company in a low-growth global packaging sector.  But it has delivered double-digit operating returns and outperformed its peers in terms of ROA.
• The company's 2018 Reinvent SEE strategy did not result in significant improvements, but this was measured against a high starting point. The company is a profitable one.
• The market price of Sealed Air Corp has declined, creating an investment opportunity with a margin of safety.

Investment Thesis

Sealed Air Corp ( SEE ) is a global provider of packaging solutions. Over the past 6 years, revenue only grew at 3.1 % CAGR. This was despite having both organic and acquisition growths. At the same time, the global packaging sector is also not a high-growth one.

Despite being a low-growth company, SEE was able to deliver double-digit operating returns. It also led its peers when it came to ROA. It may not be a wonderful company when looking at how it performed under its 2018 Reinvent SEE strategy. But this was looking at improvements from a high starting bar....

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