$75.78
$155.13
bear $75.78
base $116.31
bull $155.13
margin of safety $72.00
market price* $124.51
AptarGroup makes precision dispensing and drug-delivery devices. These include nasal and lung spray pumps, rubber stoppers and plungers for injectable drugs, active packaging that protects moisture-sensitive medicines, fragrance and skincare pumps, and food, beverage and household closures. It reports three segments. Pharma had 2025 sales of about $1.74 billion and is the profit engine: segment profit before interest, taxes, depreciation and amortization was about $608 million, a 35% margin. Beauty had sales of about $1.31 billion at a margin near 12%. Closures is the smallest segment. The core of the business is that a pharmaceutical customer's spray pump or injectable stopper is written into the drug's regulatory approval. Switching suppliers means re-filing with regulators, so once Aptar is designed in, the business tends to stay for the life of the drug. That is the main reason Pharma earns margins three times those of Beauty. How we measure earnings. We start from operating cash flow and remove working-capital swings, stock-based pay, and only the capital spending needed to maintain the existing business. Spending that clearly tracks revenue growth is treated as investment rather than upkeep. We then add back cash interest so that we first value the business as a whole and subtract what it owes afterwards. Acquisition amortization of about $45 million a year, mostly from the Noble, CSP Technologies and Voluntis purchases, is a non-cash charge and is not deducted from earnings. Instead, the fact that acquired technologies wear out is reflected in modest growth assumptions and a flat bear case. On that basis, the business produced about $4.00 of cash per share in 2023, $5.95 in 2024 and $6.69 in 2025. From 2016 to 2022 it ran between $3.10 and $4.40. The step-up is real and shows up in reported operating income, which went from about $404 million in 2023 to $496 million in 2024 and $501 million in 2025. Two things drove it: growth in injectable components (including parts for GLP-1 diabetes and obesity drugs), prescription nasal devices and royalties, and capital spending falling from about 9.5% of sales during the 2021-2023 capacity build to about 7.2% in 2025. We take the median of 2023-2025, about $5.95 per share or roughly $382 million on today's 64.2 million diluted shares, as the starting level. That window covers the business as it stands today, after the capacity build. Earlier years describe a smaller injectables business that was still in the middle of a heavy build. We did not anchor on 2025 alone. Its receivables build and pension funding were added back as timing items, which flatters the year somewhat. What changed recently. The first half of 2026 was softer. Total core sales grew only about 1%. Pharma core sales were flat because customers worked down inventories of emergency-medicine nasal sprays, which the company reported as an anticipated decline. Pharma's second-quarter margin fell 1.8 points on mix, and Beauty and Closures margins also fell about 2 points each. Operating income for the half was $234 million against $258 million a year earlier, though profit before depreciation and amortization was roughly flat. Management says the destocking should fade by the fourth quarter. We treat that as plausible, not certain. The company also took on a $600 million 4.8% note due 2031 in 2025 and used the cash, among other things, to buy back about $515 million of stock between the start of 2025 and mid-2026. Diluted shares fell from about 67.3 million to 64.2 million. That raises value per share but leaves more debt. Earnings growth. Business cash flow grew about 11% in 2025. Our base case assumes about 3% growth in year one, from roughly $382 million to $395 million, below that recent pace because of this year's destocking and margin pressure. The growth we credit rests on Aptar's own record. Revenue grew from $2.33 billion in 2016 to $3.78 billion in 2025, about 5.5% a year including currency and small acquisitions, and core growth has typically been 3-5%. That record held through 2020, when Beauty volumes fell but Pharma kept growing, and all of it was funded internally. We credit 3% a year for ten years, below that record, and do not credit further gains in Pharma margins, new product launches, or expanding GLP-1 demand beyond what the existing capacity is already serving. Base case. Business cash flow rises from about $395 million next year to about $515 million by year ten. It then grows 1.5% a year for another decade, which reflects the regulatory lock-in of designed-in drug-delivery devices and the company's long record of passing resin and labor costs through to customers. After that it is held flat. The business is worth about $8.68 billion. Against that we owe about $1.21 billion: roughly $1.37 billion of borrowings at June 30, 2026, plus about $18 million owed to minority partners, less cash beyond operating needs, and less about $77 million for the benefit of the 3.6% notes due 2032 and 4.8% notes due 2031 carrying below-market coupons. That leaves about $7.47 billion for shareholders, or about $116 per share. Bear case. The emergency-medicine weakness and Beauty margin pressure last through next year, putting cash flow at about $370 million. A recession like 2008-2009 then follows. In that downturn Aptar's sales fell about 11% and operating profit fell by roughly a fifth, as fragrance, cosmetics and household volumes dropped and destocking spread across customers. We take cash flow to about $290 million at the trough, then recover over three years to about $360 million. After that it grows about 1% a year to year ten and then stays flat, with no credit for new technologies replacing those acquired. The business is worth about $6.08 billion. Less about $1.21 billion of debt, that leaves about $4.87 billion, or about $76 per share. Even at the trough, cash flow covers interest of roughly $65 million more than four times. The nearest large maturity is the floating-rate term loan in 2027, and the company has a revolving credit line, so refinancing is not a threat in this case. Bull case. Pharma's injectable and nasal businesses fill the capacity built in 2021-2023, royalties keep growing, and Aptar keeps up its record pace of bolt-on acquisitions. Cash flow starts near $420 million, grows about 5% a year to about $650 million by year ten, then 2.5% a year for a further decade, and then holds flat. The business is worth about $11.17 billion. Less about $1.21 billion of debt, that leaves about $9.96 billion, or about $155 per share. Our previous estimates were built on a different basis that did not separate the value of the business from its debt, so they are not directly comparable. The main business changes since then are the softer first half of 2026, the margin decline in all three segments, and more debt alongside fewer shares. Margin of safety price. We are moderately confident in the earnings level. The 2024-2025 step-up shows up in reported profit as well as cash flow and has largely held through the first half of 2026. But it is only two full years old, and the business earned about a third less for most of the prior decade. The three things we are most likely to be wrong about are these. First, whether GLP-1 and other injectable component demand holds. Second, whether Beauty margins keep sliding. Third, whether capital spending stays near 7% of sales or climbs back toward the 9% of 2021-2023. If the earning power simply fell back to the 2019-2023 level, the shares would be worth roughly $73, about the same as the bear case. The structure would survive a bad outcome. Debt is under two times annual profit before depreciation, no single maturity is large, the plants are real manufacturing assets, and the Pharma franchise is protected by its regulatory lock-in. The dividend is $1.92 a year and has risen every year. That is a fair income over the holding period, which the price assumes to be three to five years. On those facts the margin-of-safety price is about $72 per share. At that price, a fall back to the old earnings level is already allowed for, so the price does not depend on the recent improvement. If the base case plays out over about four years, the business value plus dividends would roughly double from that price, which is what our required return needs. If the bear case plays out, the shares would still represent a durable franchise worth about that price.