Sealed Air Jumps as Profit Tops Estimates on Price Gains

Sealed Air Corp., the maker of Bubble Wrap, rose the most in 11 weeks after the company sacrificed sales volumes for higher prices and posted first-quarter earnings that beat analysts’ estimates.

Sealed Air rose 5.3 percent to $34.31 at the close in New York, the most since Feb. 7, 2014.

Net income rose to $71.8 million from $2.7 million a year earlier, Elmwood Park, New Jersey-based Sealed Air said today in a statement. Adjusted earnings of 33 cents exceeded the 25-cent average of nine estimates compiled by Bloomberg. Sales of $1.83 billion were little changed and trailed the average estimate of $1.84 billion.

Chief Executive Officer Jerome Peribere, on the job for a little more than a year, is raising prices to recover costs for raw materials and new product development. Average product prices rose 3.4 percent from a year earlier, while sales volume declined 0.6 percent as the company shed less profitable accounts.

“Given the purposeful ceding of volume in favor of price, the strategy clearly is underlying an improvement in profitability,” Ghansham Panjabi, a New York-based analyst at Robert W. Baird & Co. who recommends buying the shares, said in a report today.

Margins expanded the most in the food care business, adding 8 cents to per-share earnings, Panjabi said.

Sealed Air raised its 2014 forecast for adjusted earnings before interest, taxes, depreciation and amortization to the “high end” of its prior range of $1.05 billion to $1.07 billion. It raised its free cash flow forecast by $15 million to $425 million.

The company reiterated full-year forecasts for adjusted earnings of $1.50 to $1.60 per share and sales of $7.7 billion. Analysts on average estimated earnings of $1.57 per share and sales of $7.8 billion.

Bubble Wrap, a transparent plastic film with air pockets sealed between two layers, is used to cushion fragile items in shipping.

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