July 16, 2008 - AptarGroup Inc. (ATR-NYSE) designs, manufactures, and sells consumer product dispensing systems for the personal care, fragrance/cosmetic, pharmaceutical, household, and food/beverage markets. It primarily provides fragrance/cosmetic and personal care fine mist spray pumps; personal care lotion pumps; continuous spray aerosol valves; and metered dose spray aerosol valves.

Here's a company that increased earnings every year since 2001. And in that year, it matched 2000's results. Without that one year, earnings have been increasing since 1998. Over the last 5 years, they've improved, on average, 11.5% a year on sales that increased by 13.5% annually, on average. In the next 5 years, analysts see earnings going up 13% a year, on average, while revenues ramp by 11% a year, on average.

Earnings will be out on July 17 for the June quarter. Consensus estimates are for 63 cents a share, up from 52 cents last year in the same quarter. For the year, analysts look for $2.29, up from $1.95 last year. Next year, expect $2.55. The range for this year's earnings goes from $2.22 to $2.40 with 9 analysts in the mix. Next year, the range is $2.47 to $2.65, with 9 analysts reporting.

It's the Pharmaceutical division within the AptarGroup that's performing the best. Most of the newer inhaler devices use the company's nasal spray pump technology. With new inhalers for the American and European markets analysts predict a 15% increase in sales. There are no real competitors in this niche so margins should widen. However, there's the Closures group (supplies personal care pumps) which has strong competition and is seeing margin pressure. Expect the two divisions combined to leave margins as they are.

While the Pharma group is seing better sales, the Closures division is being hit with lower consumer demand as the economy forces shoppers to curtail luxury goods purchases. Lower sales of perfumes and other personal care items continue as gas and food prices go up. There is another consumer group that supplies food and beverage markets that is seeing success with the SimpliSqueeze dispensing system, especially from European condiment companies.

It's really all about the nose at AptarGroup. Inhalers are in big demand. They carry better margins than most other products the company offers. It recently bought Next Breath, a medical testing firm specializing in nasal products, for $4 million. That gives AptarGroup one more nasal product to offer its established, global customer base.

More numbers: There's $335 million in cash with current assets 1.8 times current liabilities. There's a quarter dividend of 13 cents a share for a yield of 1.4%. Sales were $1.89 billion last year. Look for $2.16 billion this year and $2.325 billion next year. Market cap it $2.8 billion on 68.013 million shares outstanding. Return on equity was 12.5% last year with analysts expecting 13% this year and 13% next year.

This is a company that reminds me of the little engine that could. The stock price has been steadily increasing since 2003 with a sharp decrease early this year (it went from $44.80 to $33, split adjusted for a 2 for 1 split last year). Now it's recovered most of that loss and is headed higher. How much more it will gain depends on management delivering solid earnings. They've done it in the past, and shareholders have been rewarded.

- Company Web site: www.aptargroup.com

- Ted Allrich