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Packaging company Crown Holdings, Inc. (NYSE: CCK) reported better-than-expected third-quarter earnings and revenues, and raised fiscal 2025 guidance above consensus. Analysts rate CCK a “Buy” and its relative valuation suggests more room for upside. CCK stock is trading up from its previous close, but can it sustain the gains? CANADA - 2025/04/09: In this photo illustration, the Crown Holdings logo is seen displayed on a smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images Crown makes aluminum cans and aerosol containers. Beverage cans represented 67% of its sales in 2024. Crown sees a $40-45 billion total addressable market for beverage cans, driven by launches of new beverages and products (in cans), amid increasing off-premise consumption. Upgraded beverage manufacturing footprint and a 47% increase in global capacity has helped Crown outpace market growth in the last 5 years and supported substantial increase in segment income and ROI. Crown generated a record $814 million in adjusted free cash flow for 2024 and expects to top that with about $1 billion in 2025. The company has steadily reduced debt, bringing its adjusted net leverage ratio down from 4.7x in 2020 to 2.7x in 2024, and reaching its long-term target of 2.5x at September end. For the third quarter, Crown earned $2.24 per share, excluding items, better than the consensus of $1.99. Revenue of $3.2 billion topped the $3.14 billion expected by analysts, while up 4.2% year-on-year. Driving the results was a 12% volume growth in European Beverage, leading to a gain of 27% in European segment income. As Europe shifts from glass bottles to aluminum cans, Crown appears well positioned to benefit. CCK stock is trading higher after management again raised adjusted EPS guidance for fiscal 2025 to $7.70–$7.80 from $7.10–$7.50. The original adj. EPS guidance for 2025 was $6.70 to $7.10. Except for a one-quarter miss, Crown has now beaten analysts’ earnings estimates for two years. MORE FOR YOU Crown markets aluminum’s recyclability to reinforce its eco-friendly image and appeal to upscale customers, like luxury cosmetics brands and craft brewers. However, improved alternatives could erode Crown’s advantage over time. Also, Crown’s performance is closely tied to Aluminum prices. So, Crown tries to protect itself from price volatilities via a “pass-through” clause in its customer contracts, which allows it to pass on higher costs to customers if Aluminum prices rise. Conversely, such a clause can strain customer relationships if prices stay high. As for tariffs, Crown roughly sees a $25 million impact from tariffs, which is less than $10 million in direct exposure, and $15 million related to softer demand amid broader uncertainties. Investors rushing to buy after the guidance boost should recall what happened last time. When Crown raised its fiscal 2025 EPS outlook in July, the stock went as high as $108.74 the next day before flattening and trending lower. After closing Monday at $94.41, CCK is trading 3% higher currently. Providing perspective on growth expectations, CEO Timothy J. Donahue noted during the earnings call: Providing perspective on growth expectations, CEO Timothy J. Donahue noted during the earnings call: “The can business is a low-growth business with pockets of outsized growth requiring discipline. Cash flow is quite high and it gives you the opportunity to generate a lot of value. So anybody expecting the company to grow 12% quarter after quarter or 20% year after year — that’s not what the can industry is.” Valuation: Crown trades at 12.5x forward earnings, about 25% below the sector median of 16.7x and its own five-year average of 13.9x. A re-rating to its historical average implies roughly 11% upside. At best, the stock could retest its 52-week high around $109, representing a 15% gain. But beyond that, the potential for near-term upside appears limited. Editorial StandardsReprints & Permissions
