AptarGroup Inc.ATR

Morningstar Rating

Stock Research and Analysis

by Morningstar Equity Analysts

AptarGroup manufactures creative consumer packaging and pharmaceutical dispensers that most of us use every day without even noticing. Its dispensing systems create convenience for consumers and differentiate products for consumer goods marketers. Despite Read more

Bulls Say

Sales of dispensing systems typically exhibit faster growth than the overall consumer packaging industry, as consumers demand increased convenience and marketers convert their products to packages with dispensers.

As developing nations experience increased urbanization and an expanding middle class, Aptar will benefit from the proliferation of grocery stores and packaged goods.

The high-margin pharma segment should continue to grow as drug makers convert more medications to inhalers and sprays. Also, Aptar is devising a dose indicator for its MDIs as well as a dispensing system for dry product medications.

Aptar's business is highly capital intensive but not labor intensive. Therefore, the risk of a direct competitor arising from low-labor cost geographies is very low, plus the shipping costs would likely make such a scheme unprofitable.

Aptar has a share repurchase authority in effect, with the ability to buy back about 4 million shares. Read more

Bears Say

The "tooling" business is a zero-margin business, as the client simply reimburses Aptar's costs for setting up the customized machine. However, over the long term, "tooling" can be beneficial to the firm, as it increases customer switching costs.

If one of Aptar's pharmaceutical dispensing devices should have a large-scale failure, the firm could face considerable consumer lawsuits that could exceed its insurance coverage for such an event.

Pricing competition in all product lines and markets is the norm for this business, forcing Aptar to continuously innovate in order to avoid commodity-type returns.

The success or failure of a customer's products, particularly in pharma, could materially affect operating results and the financial condition of the firm.

Higher raw-material costs, combined with an inability to pass those costs on to the customer, could significantly affect profitability. Fluctuations in materials costs are generally passed on to customers with a lag effect. Read more

Strategy

Although it does occasionally make small acquisitions, Aptar's growth strategy is a customer-pull model. By working closely with customers' marketing and design departments, Aptar can apply its original Read more

Management

Stability is a hallmark of Aptar's executive leadership. Despite a reshuffling of positions in 2008, most of Aptar's executives have been with the firm since the early 1990s. Chairman King Harris has held this position since 1996, and has beneficial Read more

Profile

AptarGroup is a leading manufacturer of dispensing closures, spray pumps, lotion pumps, and aerosol valves. Headquartered in Crystal Lake, Ill., nearly two-thirds of revenue Read more

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