Sonoco Products Company (SON), Ball Corporation (BLL): Wednesday’s Top Upgrades (and Downgrades)

And yet, Ball’s had some good news of late. It’s helping the U.S. build a satellite-based system for tracking orbital debris and spacecraft (with help from Boeing).

As regards valuation, however, at nearly 18 times earnings, the stock’s certainly not cheap. (Its P/E ratio is actually quite close to Sonoco’s). Analysts see Ball’s earnings growing at least 50% faster than Sonoco’s — nearly 10% per year over the next five years. Free cash flow, at $429 million for the trailing 12 months, exceeds reported net income by 11%. On the other hand, Ball Corporation (NYSE:BLL) also carries a heaping helping of debt on its books — about $3.6 billion net of cash — which may help to explain the stock’s laggard status.

Long story short, while I like the stock a bit more than I like Sonoco, I disagree with Baird’s decision to recommend buying it.

Game on!
Finally, we come to Electronic Arts Inc. (NASDAQ:EA). With a stock up 82% over the past year, this one’s clearly riding a wave of investor enthusiasm over the new generation of gaming consoles coming down the pike. Analysts at Stifel Nicolaus think EA has more room to grow, and this morning upped their price target on the stock to $27, suggesting about 17% upside.

That said, the stock’s already selling for 75 times trailing earnings. (Yes, you read that right.) And the 15% long-term earnings growth, that analysts think the turnover in gaming consoles will help EA to generate, doesn’t look fast enough to justify the stock price.

True, free cash flow at the firm is strong, running more than double reported earnings at last report, but that’s still only enough to get the stock’s price to free cash flow ratio down to 32 — and if the 15% growth estimate turns out to be accurate, that’s still too high a price to pay.

The article Wednesday’s Top Upgrades (and Downgrades) originally appeared on Fool.com.

Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends FedEx.

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