Sealed Air CorporationSEE

Morningstar Rating

Stock Research and Analysis

by Morningstar Analysts

Sealed Air has built a loyal customer base for its protective packaging products. With a global scope of operations and a business strategy that focuses on long-term macroeconomic and social trends, the company has built a defensible, narrow moat, in our opinion. Read more

Bulls Say

Sealed Air has tried to pass higher plastic resin costs on to its customers in recent years. If resin prices fall, the company will probably maintain the price gains and earn higher margins.

Longer supply chains and just-in-time manufacturing create more shipments of small packages over greater distances, driving demand for Sealed Air's products.

Global long-term growth in protein consumption and the decrease in individual agriculture provide an ongoing growth opportunity for food packagers. Read more

Bears Say

The general public is likely to refer to any generic air cellular cushioning material as bubble wrap, allowing competitors to profit from Sealed Air's trademark.

Sales growth in the U.S. has stagnated. Consistent growth hovering around 4% closely tracks gross domestic product. In the event of an economic slowdown, the firm's domestic sales will suffer. Read more

Strategy

Sealed Air reinvests in its business by funding research and development and marketing teams that provide customized solutions. As countries develop, Sealed Air will provide the sophisticated food packaging that alleviates health concerns. Read more

Management

We're fans of Sealed Air's management, whose stewardship of capital has been quite good. CEO William Hickey, who took the reins in March 2000, has shown a commitment to generating free cash flow and building shareholder value. Faced with rising plastic resin costs, management has steadily increased prices (and reduced other costs) without major volume pressures, which should pay off handsomely as cost pressures subside. Read more

Profile

Sealed Air is divided into three segments: two devoted to food packaging and one for protective packaging. In food packaging, its Cryovac line protects various meat and vegetable products as they pass through the supply chain. Read more

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