BALL Corp (BALL) stock intrinsic value fair value estimate & owner earnings analysis

Ball Corporation is the world's largest maker of aluminum beverage cans. Cans are sold under multi-year supply contracts to soft-drink, beer and energy-drink fillers, and most contracts pass aluminum price changes through to the customer. In 2025, North and Central America produced 48% of sales, Europe, the Middle East and Africa 30% and South America 16%. Ball ships about 36% of the cans made in North America, 39% in its European region and 46% in South America, in markets where only four or five companies make nearly all the cans. Coca-Cola bottlers were 15% of 2025 sales. Ball sold its Aerospace business in February 2024 (about $5.4 billion of net proceeds) and is now a beverage-packaging company with a smaller aerosol and aluminum-bottle line. How we measure earnings. We start with cash from operations, remove the swings in receivables, inventories and payables, deduct stock compensation, and deduct only the capital spending needed to keep plants running. Because debt is subtracted separately, we then add back the cash interest Ball pays (about $320 million a year) so the business is valued before its lenders. Two things were treated as one-time. First, cash tax on the Aerospace sale: Ball estimates $830 million in total, with $766 million paid in 2024 and $168 million in 2025, and a $104 million refund received in January 2026. Second, the 2020-2022 capacity build-out, when capital spending ran $1.1 to $1.7 billion a year (12.5% of sales at the peak) and owner earnings fell to about zero in 2021 and below zero in 2022. Starting level. We use the midpoint of two years that reflect the business after the build-out and after the Aerospace sale: 2023 at roughly $650 million (after removing about $150 million for Aerospace, our estimate, since Aerospace earned $223 million after tax that year) and 2025 at roughly $1.47 billion ($1.31 billion reported plus the $168 million Aerospace tax). That gives about $1.06 billion a year, or $3.98 per share on 267 million diluted shares. Earlier years, 2017-2019, point lower, at roughly $0.8 billion to $0.86 billion on a smaller sales base, which is one reason we do not start higher. Owner earnings per share were $3.58 in 2025 against $0.39 in 2024 (2024 was depressed by the tax payment); the base case assumes no growth in year one, so it starts below the latest actual result. We tested this level against Ball's own plan: 2026 capital spending of about $600 million ($320 million already committed at the end of 2025) compares with the $635 million average of running-the-plants spending in 2023-2025 behind our starting level. Growth credited. None. First-half 2026 sales rose 18% to $7.6 billion, but because aluminum costs are passed through to customers, higher sales do not by themselves mean higher profit. Volume growth, share gains and price increases that are not contracted were left out. Share buybacks (the count fell from 332.8 million in 2020 to about 267 million, with $1.32 billion repurchased in 2025) lift per-share results but spend cash, so they are not counted as growth. Ball also amortizes about $150 million a year of acquired customer relationships (first half of 2026: $75 million). That charge is added back in cash flow, but it signals a wasting asset, so we let earnings drift down in every case rather than treating them as permanent: 1% a year in the base and bull cases and 2.5% a year in the bear case. Debt. At June 30, 2026, Ball owed $7.22 billion ($6.53 billion long-term plus $0.69 billion due within a year, including roughly $0.65 billion of notes) against $0.49 billion of cash, or $6.73 billion net. Midyear cash is seasonally low because receivables and inventory build in the first half; about $0.7 billion of that reversed in the second half of last year, so we use $6.05 billion of net debt, which also includes $20 million owed to outside owners of a subsidiary. At the end of 2025 the market value of the long-term debt ($6.89 billion) was close to its book value ($6.99 billion), so we made no cost-of-debt adjustment. Ball refinanced actively in 2025 (new 4.25% euro notes due 2032, 5.50% notes due 2033, and a new $1.5 billion term loan and $2.0 billion credit line maturing November 2030, with $1.95 billion unused at year-end), so there is no large near-term wall, but low-coupon notes are being replaced at 4% to 5.5%, which raises interest cost. What each case says. Base: business cash flow of about $1.06 billion a year, flat in year one and then declining 1% a year with no end date. The business is worth about $15.2 billion, owes $6.05 billion, leaving $9.1 billion, or $34.23 per share. What persists is structural: 36% to 46% regional shares, multi-year contracts with aluminum pass-through, and plants kept up by spending we already deduct. The decline reflects the amortizing acquired relationships and competition from plastic and glass. Bear: cash flow of about $560 million a year, the 2020 result, when heavy investment absorbed cash, declining 2.5% a year. The evidence is Ball's own record of years in 2020-2023 when spending consumed most of its cash, one customer group at 15% of sales, and South American operations (16% of sales) whose local short-term borrowing costs 25.5%. The business is worth about $6.6 billion, owes $6.05 billion, leaving about $0.55 billion, or $2.06 per share. Cash flow covers the roughly $320 million interest bill about 1.7 times, so the cushion for shareholders is thin. Bull: cash flow of about $1.35 billion a year, which is the 2025 result before the one-time tax (about $1.47 billion) less about $126 million of extra spending in the 2026 plan, declining 1% a year. The business is worth about $19.3 billion, owes $6.05 billion, leaving $13.2 billion, or $49.55 per share. First-half 2026 cash flow before working capital was about $0.84 billion against $0.51 billion a year earlier; we could not tie that rise to a single cause from the filings available, so it supports the bull case only. Change since our August 2026 estimate ($14.85 / $44.10 / $76.10). The starting earnings level is about the same (roughly $1.06 billion). Values are lower in all three cases because the earlier version credited 2% to 6% annual growth that is not secured by contracts, relied on margin expansion in its high case, did not deduct stock compensation, and did not separate the value of the business from its debt in the same way; this update credits no growth and lets the wasting-asset drift run through each case. The lower 6% discount rate now used partly offsets these changes. What would make this wrong. Spending staying near 2025's low $474 million would move value toward the bull case. A return to $1 billion or more of annual spending, loss of a major customer, or a sharp currency or rate move in South America would move it toward the bear case. Because roughly $6 billion of net debt sits ahead of shareholders, modest changes in cash flow move the per-share value a lot, which is why the margin-of-safety price is about 56% below the base case.